New York's top financial watchdog: CVS-Aetna will inflate prices, hamper competition

The New York State Department of Financial Services' superintendent raised several concerns about how a combined CVS Health-Aetna entity would affect consumer markets in the state.

In a letter to Connecticut's health insurance commissioner ahead of the state's Oct. 4 hearing about the proposed merger, Maria T. Vullo said Aetna would have an unfair competitive advantage under the merger.

"Particularly in this context, the proposed acquisition of a health insurer by a PBM raises significant market competition concerns, because CVS Caremark would have the power — and the financial incentive — to offer Aetna larger rebates or other significant discounts to draw policyholders away from other insurers, thereby increasing market share that is already significant, and causing anticompetitive effects in the rest of the market," Ms. Vullo wrote.

She also raised concerns about how the proposed deal would affect New York's pharmacy benefits manager market, drug price increases, Medicare Part D concentration and competition among providers.

"Moreover, we are concerned that such 'minute-clinics' might provide unfair competition to other medical providers and hospitals, which when combined with CVS' proposed ownership of a major health insurer creates significant concerns for consumer choice and cost, as well as employment in the healthcare system overall," Ms. Vullo wrote.

On Sept. 27, Aetna inked an agreement to sell its Medicare Part D drug business to WellCare Health Plans for an undisclosed sum. Under the proposed agreement, WellCare would assume control of Aetna's business Dec. 31, provided the insurer's $69 billion sale to CVS Health gains federal regulatory approval. Aetna would continue to provide administrative services on the contract through 2019.

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