CVS and Aetna expect to close merger on Wednesday
New York State granted approval Monday contingent upon premium promises, privacy and cybersecurity compliance and $40 million towards enrollment.
CVS Health and Aetna expect to close their $69 billion merger on or about Wednesday, according to a filing with the Securities and Exchange Commission.
On Monday, CVS received approval from the New York State Department of Financial Services, which represented one of the last hurdles to the closing.
As was the case with California's approval last week, New York regulators approved the acquisition subject to a number of conditions.
These include promises that acquisition costs will not be passed onto consumers through increased premium rates or to affiliated insurers covering New Yorkers. Also, current products in the area must be maintained for three years.
CVS and Aetna also agreed to privacy controls, cybersecurity compliance and a $40 million commitment to support health insurance education and enrollment.
WHY THIS IS IMPORTANT
The companies originally said the deal was expected to close by Thanksgiving.
The benefits of the merger include an aligned and integrated approach for efficiencies to cut costs, gaining an offensive plan for market share as competitors ramp up their game.
THE TREND
The vertical merger, and others like it, such as between Cigna and Express Scripts, are getting the green light from the Department of Justice and states whereas past horizontal proposals - Anthem, Cigna and Aetna, Humana - have failed.
Insurer and pharmacy pairings continue, with Humana and Walgreens reportedly in talks to expand their partnership.
WHAT ELSE YOU NEED TO KNOW
New York regulators held a public hearing on the merger on October 18 and said they heard concerns about competition, pharmacy benefit management practices, the lack of an articulated business plan from either CVS Health or Aetna sufficient to demonstrate that any of the promised health benefits would materialize, and also issues of data privacy and security.
Several witnesses raised concerns that the CVS/Aetna Merger would give the combined entity greater power in the health insurance, pharmacy benefit manager and retail pharmacy markets, the Department of Financial Services said.
ON THE RECORD
"DFS listened to the concerns of the public and has obtained significant commitments from CVS and Aetna to address those concerns, ensuring that the companies hold to their promises of reduced costs and improved healthcare for New Yorkers, not pass on the costs of this acquisition to New Yorkers, enhance data privacy, and not act in an anti-competitive manner going forward," said DFS Superintendent Maria T. Vullo.
Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com
