DOJ OKs CVS buy of Aetna

The Justice Department gave the OK yesterday to a $69 billion merger between CVS Health and Aetna.

The DOJ approved the deal with the condition that Aetna goes ahead with its plan to sell its Medicare Part D prescription drug plan business. This will resolve some of the anti-monopoly issues the business faces.

Woonsocket, R.I.-based CVS’s plan to buy out the Hartford, Conn., company started last year, and last month Aetna announced it would sell its business for an undisclosed amount.

This deal is expected to give CVS a bigger role in health care. The merger allows the company to manage care options for patients through CVS clinics, stores and prescription drugs.

In this deal, the consumer is likely to benefit, The New York Times reported.

By purchasing Aetna, CVS eliminates the middleman between insurers and drug companies, resulting in lower costs for consumers.

“In the long run, it might be harder for new insurers to enter the market because they won’t be able to negotiate lower drug prices than the larger firms,” Craig Garthwaite, a health economist with Northwestern University’s Kellogg School of Management, told the Times. “This could result in further concentration in the health insurance market.”

Not all experts agree this may be a good thing. Alan Sager, professor of health law, policy and management with Boston University’s School of Public Health, says this will just create more big business and drive up prices.

“Competition requires small buyers and sellers, and bigger insurers and benefits may combine as a way to find and leverage higher profits and reduce pressures for lower prices,” Sager said. “By allowing large companies to merge and get bigger, it makes them more powerful bullies.”