August 16, 2018

Top U.S. Senator asks for insurance merger reviews

PHOTO | Flickr via Iowa Public Radio Images
PHOTO | Flickr via Iowa Public Radio Images
Senate Judiciary Committee Chairman Chuck Grassley

The top Republican on the Senate Judiciary Committee this week urged the U.S. Justice Department to launch a "rigorous review" of the proposed mergers involving Connecticut insurers.

In a letter to Makan Delrahim, the assistant attorney general leading the Justice Department's antitrust unit, Senate Judiciary Committee Chairman Chuck Grassley from Iowa warned federal officials that Bloomfield health insurer Cigna's proposed $67 billion acquisition of pharmacy benefits manager Express Scripts and CVS Health's $69 billion purchase of Hartford health insurer Aetna would negatively affect market competition.

If approved, Grassley, citing a new Kaiser Family Foundation report, said the combined companies, in addition to UnitedHealth and Humana, would control 86 percent of stand-alone drug plan enrollees and 71 percent of all Medicare Part D enrollees.

The Iowa politician asked the Justice Department to "conduct a robust analysis" to ensure the proposed mergers do not harm the pharmaceutical supply chain.

"Part of Congress's role is to encourage new strategies and experimentation among these market participants to drive down drug prices," he said. "To that end, vertical integration, like the proposed transactions, can often result in increased efficiencies and consumer benefits, and should be evaluated accordingly."

Grassley is not the first with concerns about the proposed deals.

Activist investor Carl Icahn on Tuesday ended his opposition campaign of the proposed Cigna-Express Scripts deal following backlash from Cigna's board of directors and a host of major shareholders.

In June, the American Medical Association (AMA), the nation's largest physician organization, asked government regulators to oppose the CVS-Aetna merger, which insurance officials have said is on pace to close in the second half of this year.

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

The California Insurance Commissioner has said it wants the Justice Department to block the CVS-Aetna merger out of fear the deal will increase health insurance costs and limit market competition.

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