June 20, 2018

AMA asks regulators to oppose $69B CVS-Aetna merger

Aetna's Hartford headquarters.

The country's largest physician organization is asking government regulators to oppose CVS Health's proposed $69 billion acquisition of Hartford-based health insurer Aetna.

After "exhaustive" analysis, the American Medical Association (AMA) on Tuesday urged California's insurance regulator to oppose the proposed agreement on pace to close in the second half of this year.

Modern Healthcare reported that California doesn't have the approval to block the deal, but that its regulatory opinion could influence other states.

AMA argues the combined companies would limit competition for pharmacy benefit management services, health insurance and retail and specialty pharmacy. It would also negatively affect Medicare Part D, also known as the Medicare prescription drug benefit, AMA said.

AMA President Barbara L. McAneny condemned the proposed deal during a hearing held Tuesday by the California Department of Insurance.

"After very careful consideration over the past months, the AMA has come to the conclusion that this merger would likely substantially lessen competition in many health care markets, to the detriment of patients," McAneny said.

AMA said it began studying the merger in December, seeking advice from academic experts in health economics, health policy and antitrust law. The group found the merger may negatively affect healthcare access, quality and affordability, AMA said.

After the merger, AMA says health premiums would surge due to an increase in market concentration in 30 of 34 Medicare Part D regional markets. Also, out-of-pocket drug costs would spike in a pharmacy market that lacks competition, according to AMA's post-hearing memorandum.

Meantime, several organizations in California have supported the proposed merger, including the chairman of the Board of the National Hispanic Medical Association Foundation, the American Cancer Society Cancer Action Network and the president and CEO of the California Hispanic Chambers of Commerce.

An Aetna spokeswoman said Wednesday the insurer plans to discuss the merger with AMA as they "create a community-based integrated model in which doctors, pharmacists, nurses and other health care professionals…"

"Our vision is to create a new, open health care model that will help consumers improve their health and simplify their health care experience," a CVS spokesperson said in a statement. "This combination does not further concentrate the healthcare sector; instead it reconfigures it to bring together disparate parts of the healthcare system that today lead to inefficient, ineffective and more costly care."

AMA's objection on Tuesday is not its first attempt to block a big insurance merger.

In 2015, AMA urged the U.S. Department of Justice to stop Aetna's proposed $37 billion acquisition of Humana and Anthem's proposed $54 billion purchase of Cigna. A federal judge in Jan. 2017 rejected the proposed Aetna-Humana merger, saying the deal would "substantially lessen competition" in the Medicare Advantage market.

In May 2017, a U.S. Appeals Court judge sided with a lower court ruling blocking the Anthem-Cigna merger, effectively killing the deal.

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