$54B Anthem-Cigna deal could be blocked

Dive Brief:

  • Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia has yet to rule on the $54 billion Anthem-Cigna merger case brought on by the Department of Justice last summer but she is now expected to block the deal sometime this week, according to a New York Post report

  • Anthem is taking advantage of its option to extend the contractual deadline to April 30, The New York Times reports. If the deal doesn’t go through by then, Anthem could owe Cigna a breakup fee” of $1.85 billion. 

  • Meanwhile, it has been reported that Cigna said it will “evaluate its options.”

Dive Insight:

Anthem has been attempting to merge with its competitor Cigna since July 2015, a move that the health insurance giant says will lead to $2 billion in savings. This claim that doesn’t seem to be having a positive influence on state and federal regulators, who cite higher prices for consumers, decreased market competition, and hindered innovation efforts as reasons to block the proposed deal. 

Should the deal go through, Anthem is poised to become the largest payer in the country, which could give it additional negotiating clout to reduce costs. Whether the savings would be passed on to members is another matter. The outcome would also have implications for the pending $37 billion megamerger between Aetna and Humana that is also facing an antitrust lawsuit filed by the DOJ. 

By taking advantage of the deadline extension, Anthem is giving Cigna additional time to make up its mind should the court decision be favorable. The fact that Cigna might want that additional time suggests that enthusiasm for the merger has waned – a surprising development given the financial losses Cigna faced last year after being sanctioned by CMS over Medicare Advantage plan deficiencies.

Filed Under: Payer Health Law Finance Policy & Regulation