DOJ asks appeals court to block Anthem, Cigna merger
Attorneys say $54 billion merger would not create the $2.4 billion in cost savings the companies say.
Ahead of Anthem and Cigna's merger appeal on March 24, the Department of Justice has asked the United States Court of Appeals to block the deal, saying it would not create the promised efficiencies.
Anthem claims the merger would create a "Cigna product at the Anthem price" and save customers $2.4 billion in medical costs, DOJ Antitrust prosecutor Scott Westrich said in court documents filed March 13. This is not supported by the evidence, he said.
The district court blocked the merger on Feb. 8. Anthem immediately said it would appeal and voiced optimism that a Department of Justice operating under a new administration would be more favorable to the merger.
[Also: Anthem/Cigna merger appeal set for March 24]
Also this week, U.S. Attorney General Jeff Sessions asked 46 chief federal prosecutors who had worked during the Obama administration to resign. U.S. attorneys are political appointees and such requests are considered routine, though usually not coming all at once.
How and if these resignations affect the DOJ in its prosecution of the Anthem/Cigna merger case is unknown.
The merger would eliminate the competition between Anthem and Cigna, Westrich said, though Anthem's expert, Mark Israel, MD. presented a different view. The proposed merger would combine the second and fourth largest health insurers.
[Also: Anthem wins lawsuit seeking restraining order against Cigna]
The court found that Anthem competes directly and aggressively against Cigna for national accounts and that, on numerous occasions, Anthem cut prices to avoid losing business to Cigna, according to Westrich.
Anthem claimed it would achieve savings by offering the Cigna product at a lower Anthem price, though the Cigna model depends upon collaboration that requires a higher level of compensation, Westrich said
"Anthem contends that this otherwise anticompetitive merger should nevertheless proceed because post-merger it will achieve $2.4 billion in medical cost savings," Westrich said. "But it offers no compelling reason to find error, let alone clear error, with the court's findings that the claimed medical savings were not cognizable because they were not verifiable, not merger-specific, and not even real efficiencies."
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