Update: Cigna sued Anthem after terminating the merger deal. Read more here.
- Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia on Wednesday ruled to block the $54 billion merger between Anthem and Cigna.
- The news follows last month's ruling from federal judge John B. Bates to block the merger between Aetna and Humana.
- “Today’s decision is a victory for American consumers,” said acting Assistant Attorney General Brent Snyder of the Justice Department’s Antitrust Division. “This merger would have stifled competition, harming consumers by increasing health insurance prices and slowing innovation aimed at lowering the costs of healthcare."
Judge Jackson was not convinced of Anthem's argument that the merged company would reduce pricing for consumers and help spur competition in the national account market. Jackson ruled the merger would violate antitrust law and would lead to increased consumer costs.
The ruling – alongside the blocked merger between Aetna and Humana (though Aetna has up until Feb. 15 to decide whether to appeal) – puts a pause on major insurance consolidation for now. Anthem had tried to play up the Aetna-Humana ruling in favor of the Cigna merger but the Cigna-Anthem merger was always seen as a harder sell.
According to the Justice Department, the district court's opinion is temporarily under seal to allow the parties to review for confidentiality, though many sources/reports have gotten their hands on it. In screenshots of the ruling, Jackson's decision seems to underscore the ongoing tension and bickering between the two insurers. In September, The DOJ noted the pair have accused each another of breaching the billion merger agreement.
In the ruling, Jackson notes that Cigna officials seems to actively testify against the planned merger:
In addition, Jackson questioned whether medical savings can be achieved if physicians and hospitals seek increased payment for a higher workload likely required under the merger:
JUST IN: Judge blocks Anthem-Cigna merger, doesn't buy "rosy vision" of wonderful combined company pic.twitter.com/guJ6hz4mf8— Jeff Overley (@JeffOverley) February 9, 2017
While Aetna-Humana still has a fighting chance, the infighting and the decision likely puts a stake through the heart of the merger. It is also likely to increase tensions between the insurers as Anthem stands to lose $1.85 billion in breakup fees over a merger that court documents suggest Cigna was trying to actively undermine after reconsideration.
On Thursday, Anthem stated it "promptly intends to file a notice of appeal and request an expedited hearing of its appeal to reverse the Court’s decision so that Anthem may move forward with the merger."
If the merger is truly dead, Cigna may still find itself searching for other partnerships or merger opportunities. CEO David Cordani has stated the company will have about $14 billion to play with in cash and borrowings and look into "strategic M&A," The Wall Street Journal reported.