- The Delaware Court of Chancery on Thursday denied Anthem's request to block Cigna from terminating the proposed $54 billion merger between the two health insurance giants.
- The decision is a win for Cigna, which is now one step closer to ending the deal as it has been attempting to do since a federal judge blocked it in February on antitrust grounds.
- Vice Chancellor Travis Laster of the Delaware Court of Chancery concluded that the companies probably won't be able to overcome the challenges still facing the merger, though he gave Anthem a few days to decide on whether to appeal the ruling so Cigna can't leave just yet.
Anthem has been doing its best to keep the merger alive. It recently made a last-ditch appeal to the U.S. Supreme Court after losing its previous attempt to reverse the ruling in favor of the Department of Justice (DOJ), which filed a lawsuit to block the merger in July 2016, citing increased prices to consumers, dampened competition and hindered innovation efforts. Anthem and Cigna have argued that the combined company would generate $2.4 billion in annual medical cost savings.
Judges have agreed with the DOJ that the merger would lead to decreased competition in the health insurance market for national accounts. The SCOTUS petition now looks even less likely to be granted than before.
During the hearing Monday in which the companies discussed Anthem's request for a 60-day extension on the restraining order it had against Cigna, officials at both of the companies once again accused each other of breaching the terms of their 2015 contract. Anthem has claimed that Cigna has been uncooperative. Cigna, on the other hand, argued that Anthem was pursuing a failed litigation strategy.
The payers' contractual deadline was April 30. But arguments between the companies in court have frequently been tense and this has made it increasingly difficult for them to prove to federal enforcement that they would be able to effectively implement any efficiencies. Cigna has been seeking more than $13 billion in damages as well as the $1.85 billion contractual breakup fee and declaratory judgments from Anthem that the deal has been lawfully terminated. “We believe in the merits of our claims and dispute Anthem’s claims, and we intend to vigorously defend ourselves and pursue our claims,” Cigna’s May 5 SEC filing states.
A Cigna representative noted that the company will be free to leave the deal if Anthem doesn't inform the court that it intends to appeal the court decision by noon on Monday. "We look forward to closing this final chapter,” Chrissy Randall of Brunswick Group told Healthcare Dive on behalf of Cigna.
The antitrust case the DOJ brought against Anthem-Cigna initially also sought to block the $37 billion merger between Aetna and Humana, which was proposed in 2015 as well. It was later split into two cases because the antitrust concerns with Aetna-Humana largely revolved around Humana's presence in the Medicare Advantage market.
The healthcare industry has been changing at a fast pace over the past few years and leading organizations like the American Hospital Association have spoken out against Anthem-Cigna arguing that the deal would have a detrimental impact on innovation efforts at a time when they are most needed for the industry's move toward value-based care.
The "courts have sent a clear message: If you want to merge with a competitor, that's not likely to get through the legal process,” Martin Gaynor, a professor of economics and health policy at Carnegie Mellon University Heinz College, recently told Healthcare Dive. “Any insurer that is thinking about a merger certainly has to take that into account."