California's insurance commissioner asked the Department of Justice to sue to block CVS Health's $69 billion takeover of Aetna, according to an Aug. 1 announcement.
California Insurance Commissioner Dave Jones said the proposed merger would have significant anticompetitive effects in Medicare Part D, pharmacy benefit manager services and retail pharmacy markets. The lack of competition would lead to higher costs for millions of consumers, he said.
"A merger of this size and type, according to experts on health insurer and healthcare mergers, will likely lead to increased prices and decreased quality," Mr. Jones said. "Traditional methods to avoid market concentration will not address potential impacts on service quality, the power to charge excessive rates, or the creation of barriers to block a potential market participant with the resources to enter into new markets."
Mr. Jones made his recommendation after analyzing testimony from a June 19 public hearing, including information from CVS and Aetna executives, provider groups, and healthcare academics.
Mr. Jones said if CVS absorbs Aetna, "an important potential competitor in the PBM market" will disappear. However, the companies have said the deal will provide localized, community-based care across CVS Health's 9,700-plus pharmacies and 1,100 clinics. Sources familiar with the deal told Reuters in December that CVS Health plans to significantly extend health services at its pharmacies under the merger.
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