Published: Thu, September 20, 2018
Health Care | By Cedric Leonard

Cigna gets DOJ approval to buy St. Louis based Express Scripts

Cigna gets DOJ approval to buy St. Louis based Express Scripts

The U.S. Department of Justice has given an earlier-than-expected all-clear to Cigna Corp.'s quest to acquire pharmacy benefits manager Express Scripts, a move that presages further consolidation among those left standing alone in the health-care sector.

Cigna and Express Scripts still must secure certain state regulatory approvals to complete the deal, which was first announced in March, but the nod from the federal antitrust enforcers takes care of the biggest hurdle.

The Justice Department's six-month review found that the merger is "unlikely to result in harm to competition or consumers" due to Cigna's small nationwide PBM business and the preponderance of other PBMs in the market. The deal won't significantly reduce competition for the services provided by pharmacy-benefits managers or raise costs for Cigna's rivals, the department said in a statement.

Express Scripts shares rose 3.7 percent to $95.23 at the close of trading in NY.

Approval by the Justice Department smooths the way for the deal to wrap up by the end of the year, the companies said Monday in a joint statement.

That's mainly because CVS and Aetna "compete head to head in Medicare Part D prescription drug plans", in almost three dozen markets nationally, point out CNBC's Carmin Chappell and Bertha Coombs.

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California's Attorney General in particular has blasted the proposed Aetna-CVS union, citing anti-competitive impacts, and asked the Justice Department to block it.

As reported by Healthcare Informatics Managing Editor Rajiv Leventhal back in April, the CVS-Aetna deal came nearly a full year after a federal judge blocked a merger that would have resulted in Aetna acquiring the Louisville, Ky. -based Humana, which at the time was the largest acquisition of its type in the history of health insurance in the USA, reported at $37 billion. Visit MarketWatch.com for more information on this news. In the past two years, the U.S. Department of Justice challenged and stopped two health insurance mega-mergers, the Aeta-Humana deal and a proposed $54-billion merger between Anthem, Inc. and Cigna. But Icahn abandoned his efforts to derail the merger after two independent advisory firms recommended shareholders approve it. Cigna and Express Scripts' investors approved the deal in late August.

Brian Tanquilut, an analyst with Jefferies, said DOJ's decision not to intervene is not surprising "given the lack of overlap between Cigna's business versus Express Scripts".

"The value that we deliver together will help put our society on a far more sustainable path - one that helps health care professionals close gaps in care and supports our customers along their health journey", he adds. CVS and Aetna shares also rose, closing up 1.5 percent and 1 percent, respectively.

Both Express Scripts and Cigna shares closed higher Monday from the previous close following the DOJ clearance.

To date, Cigna and Express Scripts have obtained clearances from departments of insurance in 16 states.

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