The word â€œunprecedentedâ€ is used frequently in news reports to describe the CVS-Aetna merger, a $69 billion deal approved by the Justice Department last year.
Forbes called the merger an unprecedented â€œconcentration of power in the health care system.â€ Modern Healthcare and The Hill both used the word â€œunprecedentedâ€ to describe U.S. District Court Judge Richard Leonâ€™s continued investigation of the deal after it had already formally closed last November. And the Wall Street Journal said Leonâ€™s move to schedule a hearing last month with live testimony was without precedent.
Precedent-setting continues with closing arguments that will be held in the case tomorrow in Washington as the AMA takes a powerful role in the effort to prevent a merger that would have anti-competitive effects and harm patients and physicians.
The AMA has presented evidence showing that the CVS-Aetna merger will hurt competition and increase premiums in the Medicare Part D prescription drug plan (PDP) market. Notably, prior to joining forces, Aetna and CVS had competed against each other for PDP customers on factors such as quality and price.
Advocacy efforts began shortly after the merger was announced Dec. 3, 2017, and have crisscrossed the country, taking the fight to the nationâ€™s capital, as well as to various state capitals, where the AMA warned state insurance officials that the deal would harm consumers by raising prices, lowering quality, reducing choice and stifling innovation.
Data-backed arguments against deal
The AMA has opposed this merger in which the nationâ€™s third-largest health insurer, Aetna, gets absorbed by CVS Health Corp., a sprawling conglomerate that includes the largest retail pharmacy chain and specialty pharmacy in the U.S. and the largest pharmacy benefit manager (PBM), Caremark.
The deal would lead to the â€œformation of a vertically integrated PBM tight oligopoly of CVS-Aetna, Express Scripts/CIGNA, and United Health/OptumRx,â€ the AMA told U.S. Assistant Attorney General Makan Delrahim in a 2018 letter.
The DOJ approved the merger last fall subject to Aetna divesting its PDP business. That business was subsequently sold to WellCare Health Plans, which the AMA argued served only to further reduce competition among PDPs.
Judge Leon also criticized the divestiture, saying it represented â€œless than one-tenth of 1%â€ of the CVS-Aetna deal.
The loss of competition in the PBM market is just one of the angles from which the AMA has argued against the deal, backing its arguments with loads of data obtained from nationally recognized antitrust experts who have evaluated the merger.
Other reasons to oppose the CVS-Aetna merger include:
- The benefits of the merger are speculative.
- There are likely anti-competitive impacts in the PDP, health insurance, retail pharmacy, specialty pharmacy and PBM markets.
- The merger is likely to raise health insurance premiums.
- Any efficiencies resulting from the merger are unlikely to be passed along to consumers.
PBM concentrationâ€™s impact
For a hint at what PBM market concentration makes possible, look to Ohioâ€™s Medicaid managed care program. According to the Columbus Dispatch, PBMs â€œtransferred $224 million from taxpayersâ€™ walletsâ€ directly to theirs through â€œspread pricingâ€ where the PBMs reimbursed pharmacies almost 9% less than they were paid by the state.
The paper also reported that, as PBMs cut payments to pharmacies struggling to remain open, the parent company of one of them, CVS, sent their owners letters â€œsympathizing with their financial woes and offering to buy them out.â€