SACRAMENTO — California Attorney General Xavier Becerra, along with the U.S. Department of Justice (USDOJ) and a multistate coalition, have announced a settlement in the CVS Health (CVS) and Aetna merger.
The settlement requires Aetna to sell the Medicare Part D plans of 1.5 million people to their competitor, WellCare Health Plans, to ensure competition in the prescription drug benefit market for Medicare beneficiaries. In addition, Aetna is prohibited from selling any new Medicare Part D plans in 2020.
The proposed merger raised significant antitrust concerns due to its potential impact on prescription drug prices for seniors in Medicare Part D, as well as individuals who are dually enrolled in both Medi-Cal and Medicare and who qualify for the federal Low-Income Subsidy Program.
This settlement resolves California’s yearlong investigation into the $69 billion merger of CVS, a nationwide drugstore chain, and Aetna, one of the nation’s largest health insurance carriers.
Becerra announced the settlement along the USDOJ and Attorneys General from Hawaii, Mississippi, Florida and Washington.
“We can’t stand idly by and watch a merger go through that could lead to higher prescription drug prices and fewer choices for our seniors,” Becerra said.
“Market consolidation benefits big business’ bottom line at the expense of seniors’ pocketbooks. We know that over-consolidation is bad for healthcare and leaves millions of Californians with fewer options. We will keep close watch to ensure that the terms of this settlement are met.”
The proposed merger would join two of the largest companies in the prescription drug market: CVS, which holds the second largest market share, with Aetna, the fourth largest.
Without requiring Aetna to sell off part of its business in order for the merger to go through, the consolidation would have limited access to affordable prescription drug benefits, Becerra’s office said. It would have also harmed California’s most vulnerable populations, seniors ages 65 and over and people with disabilities, by reducing options and increasing healthcare costs.
The state attorney general also pointed to a recent report by the University of California at Berkeley’s Petris Center on Health Care Markets and Consumer Welfare that he said confirms that rapid consolidation of healthcare markets in California has led to rising healthcare costs for consumers throughout the state.