Federal Judge Finalizes CVS-Aetna Merger, But Critics Wary of Harm to Consumers

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On September 4, 2019, U.S. District Court Judge Richard J. Leon formally approved the merger between the health care giants CVS and Aetna, but will consumers experience any benefits as a result of the deal? Some critics, including the American Medical Association (AMA), the American Antitrust Institute (AAI), and the U.S. Public Interest Research Group (PIRG), aren’t convinced.

Leaders for the two companies have heralded how the merger will transform the United States health care system by advancing their Minute Clinic model that is designed to give consumers more convenient access to health care providers and health counseling. However, large-scale mergers like these have the potential to consolidate market power in a way that harms consumers. CVS has claimed that the merger will save consumers money while boosting profits for investors, but the U.S. PIRG warns that there isn’t a way to hold the newly merged company accountable for these promises and that it’s more likely that costs will increase for consumers. The AMA went a step further and argued that it is impossible for the newly merged company to deliver on its promises to consumers. The AMA points out that retail clinics often operate at a loss, losing on average $41,000 a year. This suggests that the company’s Minute Clinic model is unsustainable as a long-term solution to America’s health care access issues. The AAI took steps to warn the U.S. Department of Justice about the merger in a series of letters to the agency, claiming that it will hurt both consumers and the health care industry. Specifically, the AAI claims that the newly merged company will be able to wield monopolistic power in the Medicare Part D market as well as prescription drug distribution, provider, and commercial health insurance markets.

Judge Leon’s approval of the merger is the final hurdle that the companies needed to clear to complete the business deal. This could pave the way for similar deals between the company’s competitors, such as Amazon, Walgreens, and Walmart. Additional mergers between Express Scripts-Cigna and Optum Rx-United Healthcare were recently completed, and there are now three large companies that are integrated insurers and pharmacy benefit managers. According to the AAI, these companies could dominate health care markets and would have few incentives to compete with each other. A lack of competition in this market would likely cause costs to rise for consumers.

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