Grassley urges 'careful analysis' of healthcare mergers, citing drug supply chain consolidation

Chuck Grassley
The merged companies, along with UnitedHealth and Humana, would cover a very large share of Medicare Part D and standalone drug plan enrollees, Grassley notes. (Gage Skidmore/CC BY-SA 2.0)

A prominent senator is pressuring the Department of Justice (DOJ) to scrutinize two pending healthcare mergers very closely.

In a letter (PDF) to Makan Delrahim, assistant attorney general of the antitrust division, Sen. Chuck Grassley, R-Iowa, asked the DOJ to "conduct a careful analysis" of the CVS-Aetna and Cigna-Express Scripts transactions “to ensure that competitive markets in the pharmaceutical supply chain are not impacted adversely." 

DOJ has been analyzing both deals for months, but it is significant that Grassley specifically is weighing in publicly.

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RELATED: California insurance commissioner urges DOJ to block CVS-Aetna merger

In his letter, Grassley acknowledged that vertical integration can help businesses operate more efficiently, which can lead to lower prices for consumers. Since drug prices have risen substantially in recent years, he adds, Congress encourages participants in the drug market to experiment with ways to bring those prices down.

However, vertical integration can hinder other companies from entering a market as well, and “we must ensure that these transactions do not foreclose competition and consumer access, or hinder innovation, especially in underserved rural areas,” he wrote.

The American Medical Association and the California insurance commissioner have urged DOJ to block the CVS-Aetna merger, citing concerns over consolidation in the Part D and PBM markets, where just a few companies would have a significant share. 

Grassley also noted in his letter that the two combined companies plus UnitedHealth and Humana would cover 71% of Medicare Part D enrollees and 86% of standalone drug plan enrollees.

RELATED: UnitedHealthcare may buy Genoa; Mississippi quietly amends work requirements

At a House Judiciary Committee hearing in February, representatives from CVS and Aetna insisted their deal would not adversely impact consumers. But less than two weeks before that, multiple business experts told the House Subcommittee on Oversight and Investigations that healthcare mergers don’t pay off for patients.

However, last month, reports emerged that the Department of Justice will approve the merger, which is valued at $69 billion.

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