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By Alex Ruoff
Lawmakers will confront executives from CVS Health Corp. and Aetna Feb. 27 over whether their proposed $67.5 billion merger will mean those covered by their competitors will pay higher costs for drugs.
A House antitrust panel will debate how combining one of the country’s largest pharmacy companies, which owns a major drug-industry middleman, and an insurance company will affect drug prices for those who aren’t covered by Aetna, an attorney who met with lawmakers and their staff on the committee and requested anonymity to speak about the discussion, told Bloomberg Law. The concern is the combined company would violate antitrust laws by using its pharmacy benefit management services to give Aetna an advantage over its competition.
“The merger between CVS and Aetna could have wide ranging effects on costs for consumers and competition in the healthcare marketplace,” Rep. Tom Marino (R-Pa.), head of the House’s antitrust panel, said in a statement. A spokesman for Marino’s panel added the congressman doesn’t oppose the merger and is largely seeking answers about the impact of combining the two companies.
The companies say their merger will do the opposite.
A spokeswoman for CVS told Bloomberg Law the combined company would reduce costs broadly in the health-care system and doesn’t create antitrust concerns. CVS is working with the Justice Department and expects to complete the merger later this year, Carolyn Castel, a spokeswoman for CVS Health, said.
Together CVS and Aetna total more than $240 billion in annual sales and would be involved in selling insurance, negotiating drug prices between drugmakers and insurers, and running a major pharmacy chain, according to company data from Bloomberg Law.
The merger hasn’t raised red flags for small, privately owned pharmacies, John Norton, the director of public relations for the National Community Pharmacists Association, told Bloomberg Law. The group has warned about consolidation in the industry, but doesn’t see the combination of a major insurer and pharmacy chain as a major factor in rising drug prices, he said. Norton’s group has neither endorsed nor opposed the proposed merger.
In general the Department of Justice has sought to block fewer vertical mergers, combinations of companies on different sides of the supply chain, than horizontal mergers, where the companies have the same customers. The DOJ sued to block mergers between Anthem Inc. and Cigna Corp., and Aetna and Humana Inc.
Both companies provide Medicare drug plans, however, with CVS being the largest provider of such plans.
The House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law Feb. 27 will host the general counsels for CVS and Aetna, Thomas Moriarty and Thomas Sabatino Jr., respectively, to discuss the merger of the two companies. The panel will later that day hear from economists and consumer representatives on the same topic.
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