- Maria Vullo, New York's top financial watchdog, is sounding the alarm over the proposed $69 billion marriage between CVS and Aetna. She warns that the merger could lessen competition and raise prices for consumers. Her concerns were contained in a letter sent to the commissioner of Connecticut's insurance department, intended to arrive before the state's Oct. 4 hearing on the matter.
- Vullo said the merger would give Aetna an "unfair competitive advantage." CVS' PBM would have an incentive to give the largest drug discounts to Aetna members, causing "anti-competitive effects" in the rest of the market, according to the letter.
- She also raised concerns about the Medicare Part D market in New York and how the deal could further concentrate the market, eliminating choices for consumers and driving up prices.
The letter comes as the megamerger awaits clearance from the Department of Justice, which appears set to give its OK, according to news reports. The agency recently cleared the Cigna-Express Scripts deal, which was viewed as a good sign for Aetna and CVS.
The pharmacy giant's executives say the merger is expected to achieve $750 million in savings by the second full year after the deal closes. At a recent investor meeting hosted by Mizuho Securities, CVS leaders touted the benefits of the merger, adding that once the deal closes, if it does, the company's stores will have access to 20% of Aetna's members who already shop there. That matters because CVS believes its pharmacists play a crucial role in shaping a patient's overall behavior as it relates to their health.
The letter from Vullo, superintendent of New York's Department of Financial Services, comes as Connecticut is set to hold public hearings reviewing the deal.
"The proposed transaction, if approved, would create an incredibly large market share in the health care market for the combined company, in an already concentrated marketplace, and is likely to increase prices for members and reduce options for consumers, without any discernible increase in quality," Vullo wrote to Katherine Wade, commissioner of Connecticut's insurance department, in a letter dated Sept. 17.
While part of Vullo's concerns focus on a concentrated Medicare Part D market, it's expected that the combined company will have to divest some of those plans to clear antitrust hurdles.
Vullo also raised similar concerns about the failed Anthem-Cigna merger.
Last year, DOJ blocked both the Aetna-Humana merger and Anthem-Cigna, saying the transactions would weaken competition and, ultimately, hurt consumers.
The agency said the Aetna-Humana deal would lessen competition for Medicare Advantage plans in 364 counties and rejected the companies' proposal to divest some of those plan members to its competitor Molina.
In blocking the Anthem-Cigna merger, DOJ said it would reduce competition for those who gain insurance coverage from national employers as well as weakening competition among MA plans in more than 350 counties in 21 states.
The deals were ultimately unsuccessful.