Recently on October 10th, the Department of Justice approved the proposed merger of the health insurance company Aetna and the drugstore chain and pharmacy benefit manager CVS (PBM). However the approval is dependent on Aetna divesting its Medicare Part D business, which covers prescription drugs for seniors. And the transaction is not out of the woods yet. New York is debating whether to block sections of the merger-an excellent idea that help protect consumers and reduce the harm caused by this acquisition.
We previously blogged about the New York Department of Financial Services's hearing on the Aetna and CVS merger, and observed that Superintendent Vullo stated the merger will greatly impact New York and that DOJ's approval did not address many concerns-in her words, it was "myopic." She is concerned about the transaction's impact on health care premiums, independent pharmacies, and higher drug prices. Witnesses at the hearing urged the state to block the deal, stating the merger would reduce competition and drive up the cost of prescription drugs. These witnesses included the Pharmacists Society of the State of New York, the Medical Society, and Assemblyman Richard Gottfried.
In the past State Insurance Commissioners have used their power to protect consumers and block harmful and anticompetitive mergers, and in other cases they have stepped in when the federal government has remained inactive. In May 2016 the Missouri Department of Insurance ruled that the proposed merger of health insurance companies Aetna and Humana would drastically harm competition and seniors, and issued an injunction against the deal. That order pushed the Department of Justice to take carefully scrutinize the proposal and likely played a significant role in their decision to file suit against the merger in federal court.
Superintendent Vullo and the New York Department of Financial Services should follow in these footsteps, and block the merger of Aetna and CVS to protect consumers.