Cigna reverses course, says Anthem merger should be approved
- Cigna filed a brief with the U.S. Court of Appeals on Thursday in which it deferred to the conclusion in Anthem's appellate brief that the court ruling that blocked their $54 billion merger should be reversed.
- The health insurance giant's merger agreement requires Anthem to be "responsible for developing and leading the antitrust strategy, among other things" so it "controlled the development and presentation to the district court of the evidence and argument supporting the legality of the merger," the filing states.
- Cigna's brief comes after the Appeals Court granted Anthem's motion to expedite the appeal process.
Cigna's decision to side with Anthem again and request that the court blocking of the deal be overturned is somewhat surprising considering that both companies filed lawsuits against each other a few weeks ago. Cigna attempted to put an end to the deal and its lawsuit argued for Anthem to declare the agreement had been "lawfully terminated" and to pay more than $14 billion in damages. In response, Anthem requested a temporary restraining order against Cigna to prevent it from terminating the merger. A Delaware court granted Anthem's request.
After turning down Anthem's offer to extend the contractual deadline again, attempting to terminate the deal and filing a lawsuit against Anthem, whether Cigna has now changed its mind is unclear. But how much of a difference Cigna's new brief will make in the Court of Appeal's consideration of the companies' request could be seen in the coming weeks. The oral argument is set to begin on March 24. The companies' contractual deadline is April 30.
The companies proposed their plans to merger in 2015 but have faced scrutiny from state and federal government, including the Department of Justice (DOJ), which filed the lawsuit in July 2016 seeking to block the deal. A federal judge ruled in favor of the DOJ last month, concluding that the deal would likely result in increased prices for consumers, eliminated "competition against each other for national accounts," and hindered innovation efforts in the insurance market, though Anthem contended that any anticompetitive effects of the combined company would be offset by the efficiencies it would create. According to Anthem, the federal judge "made serious errors of law, fact, and logic." Combining the two companies would create the largest payer in the U.S.
Earlier this week, the American Medical Association, which has been opposed to the deal from the beginning due to anticompetition issues, sent a letter to acting Assistant U.S. Attorney General Brent Snyder expressing its concerns with Anthem's recent statements in the Delaware court. “We find it implausible that the U.S. Department of Justice (DOJ), eleven states and the District of Columbia—that have diligently and successfully prosecuted this antitrust merger case—could now be swayed to allow this merger to close pursuant to politically driven settlement negotiations as Anthem has suggested,” AMA CEO Dr. James Madara wrote. “To do so would cause irreparable harm to the integrity of the federal courts to adjudicate anticompetitive behavior in a fair and impartial manner, leaving consumers at risk," Madara added. "We strongly believe that political influence should play no role in the enforcement of the antitrust laws and urge you to vigorously defend Judge Jackson’s ruling.”
The other two health insurance giants that had proposed plans to merger – Aetna and Humana – also had their deal blocked in court in the antitrust case also brought on by the DOJ last summer. They then mutually agreed to end their plans to merge. However, the two cases have some differences. “Antitrust is fact-specific,” Martin Gaynor, a professor of economics and health policy at Carnegie Mellon University Heinz College, told Healthcare Dive. “Each case is decided based on the specific facts of that case," he said. "If the facts for Anthem-Cigna look very different than they did for Anthem-Humana, then the decision could go the other way.”
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