Published: Thu, September 20, 2018
Health Care | By Oscar Goodwin

Cigna-Express Scripts deal gets U.S. antitrust approval

Cigna-Express Scripts deal gets U.S. antitrust approval

The U.S. Justice Department has flashed a green light for the proposed merger of Cigna and Express Scripts, just six months after the two companies announced plans to join forces. Express Scripts, based in St. Louis, is responsible for the prescription plans of more than 80 million Americans.

"Both insurers and pharmacy benefit managers serve as middlemen for employers and governments, and the proposed mergers are an attempt to convince their customers that they are working to reduce costs", Reed Abelson observes for the New York Times.

The deal is expected to close by the end of the year.

The Department of Justice on Monday said it will not challenge Cigna's $67 billion acquisition of Express Scripts because the deal "is unlikely to result in harm to competition or consumers".

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"Quality health care and competitive pricing for health care services and pharmaceutical drugs is critical to US consumers", Makan Delrahim, an assistant attorney general, said in a statement.

In particular, the agency said the merger would not lessen competition in the sale of PBM services because Cigna's in-house PBM business is small and at least two other large PBMs and several smaller ones remain in the market.

Cigna's deal for Express Scripts came on the heels of CVS Health Corp.'s $68 billion deal to buy insurer Aetna Inc., which is still under review. The two mega-mergers highlight the growing trend of healthcare companies vertically integrating to combat headwinds including softening patient admissions and ever-rising healthcare costs. The decision bodes well for the pending US antitrust review of CVS Health Corp's (CVS.N) proposed $69 billion acquisition of health insurer Aetna Inc (AET.N). Days after news of the Cigna/Express Scripts merger, Centene Corporation announced it had made a major investment in RxAdvance, a cloud-based PBM led by former Apple CEO John Sculley. The deal is just one in a string of acquisitions now reshaping the health landscape as businesses struggle to survive in the ever-changing industry. These were Aetna's thought to develop smaller USA properly being insurer Humana Inc (HUM.N) for $37 billion, and a deliberate $54 billion combination of insurers Anthem Inc (ANTM.N) and Cigna.

"The transaction would violate antitrust laws by reducing competition among insurers", U.S. District Judge John D. Bates in Washington said at the time, according to Leventhal's article.

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Cigna overcame a last-minute effort by activist investor Carl Icahn to nix the deal, warning fellow shareholders in an early-August open letter that the deal was among the "worst acquisitions in corporate history".

Cigna's purchase of Express Scripts comes as PBMs' role in prescription drug costs has come under scrutiny.

Ana Gupte, an analyst at Leerink Partners, said approval of the Express Scripts deal is a positive sign for CVS and Aetna.

"We are pleased that the Department of Justice has cleared our transaction and that we are another step closer to completing our merger and delivering greater affordability, choice and predictability to our customers and clients as a combined company", David Cordani, president and chief executive officer of Cigna, said in a statement.

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While the federal antitrust division will not seek to block the merger, the deal is still subject to state regulators and various departments of insurance.

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