US Okays CVS Health-Aetna Merger while Requiring Divestiture

cvs aetna merger

This post was last updated on November 1st, 2018 at 01:15 pm

“Health is wealth” like the popular maxim says. A healthy nation is a wealthy nation. This is true with the current challenges faced by the Aetna, a situation which gave the US authorities the right to take the bull by the horn in solving the issue. The CVS Atena Merger is one such potential step.

CVS Health were given the power to take over the US$69 billion Aetna assets after it acquire the companies in order to “divest a drug prescription program because of antitrust concerns”, it was gathered.

The companies, for that reason were mandated by the Justice Department to divest Aetna’s Medicare Part D prescription drug plan for individuals to WellCare Health Plans, the report says. Allowing CVS Aetna merger to put this two together without this condition being imposed would lead to poor service and increase in price across about 22 States of the country. Many people were already skeptical about the decision by the Justice Department, but in response the Assistant Attorney General, Makan Delrahim in a statement said “Today’s settlement resolves competition concerns posed by this transaction,” “The divestitures required here allow for the creation of an integrated pharmacy and health benefits company that has the potential to generate benefits by improving the quality and lowering the costs of the healthcare services that American consumers can obtain.” He added.

It is for the case of antitrust that Department of Justice and Attorneys General from five US states filed a suit against the merger, further proposing a settlement on the required divestiture. This is a situation that a US judge must approve before any settlement can be executed.

The CVS Aetna merger was revealed in December 2017 with the former being a drugstore and retail chain, and the latter being an insurer. The merger was “part of a wave of health transactions aimed at controlling costs in the morass-like US health system of public and private programs that is comprised of myriad hospitals, insurers, gatekeepers and drug companies.” the report says.

With CVS Health in strategic locations that it believed to be within 3 miles of 70 percent of its customers, the merger was characterized as a way to their customers better than it has always been.

Larry Merlo, the Chief Executive of CVS discussed at the town hall meeting held recently the plans to strengthen the preventative health and the treatment of chronic health conditions with a strengthened clinic presence at each of their stores and to have a more constructive use of patient health data across board.

Reports have it that Aetna shares experience a growth of 1.3 percent to record US$206.44 in trading earlier in the day. CVS Health in the same vein recorded a gain of 0.9 percent to record US$80.18 while WellCare gained 0.2 percent to record US$311.71 all in the trading environment.

As long as CVS Health abides with the antitrust laws, the CVS Aetna merger stands. The intervention was timely and the resolve was seen as a proactive measure to put patients mind to rest once and for all.


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