Congress should closely scrutinize proposed CVS-Aetna merger

AMA Wire
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The AMA last week asked Congress to closely scrutinize the massive proposed merger of CVS Health and Aetna because of the potential negative impact it poses to American health care consumers. The AMA submitted a written statement to the House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law in anticipation of a Feb. 27 hearing entitled "Competition in the Pharmaceutical Supply Chain: The Proposed Merger of CVS Health and Aetna." 

The statement to Congress expresses the AMA's concerns that the proposed merger has the potential to worsen competition (or reduce hopes for amelioration) in three poorly performing markets: pharmacy benefit manager (PBM) services; local health insurance markets; and many local retail pharmacy markets. 

Since CVS and Aetna announced the deal in early December, the AMA has been proactively analyzing the merger. Unlike health insurance mergers, which involve merging of competitors, the CVS-Aetna merger is largely a merger of non-competitors, also called a "vertical merger."

It is much harder to analyze and predict the anticompetitive effect of a vertical merger than a horizontal merger. The merger itself is in its early stages, and the AMA will continue to evaluate the merger's likely effect on competition in health insurance, PBM and retail pharmacy markets, as well as the impact that the merger might have on physician practices and patient care. 

In its investigation and review of the proposed CVS-Aetna merger, the AMA is following the same evidence-based, joint AMA-Federation of Medicine model that proved so effective in opposing the Anthem-Cigna and Aetna-Humana mergers. Evidence-based merger advocacy is essential for the AMA to protect and build on the well-earned reputation for credibility that it achieved when opposing the health insurer mega-mergers. 

The AMA has already built a coalition of all state medical associations in markets that might be affected by the CVS-Aetna merger, as well as interested national medical specialty societies. The AMA is also reaching out to nationally known health economists and other antitrust experts, and communicating with other potential advocacy allies. 

The AMA will continue to work with these medical societies, experts and allies to maximize ways to persuade state regulators to closely scrutinize the CVS-Aetna merger and make available to the AMA and the Federation of Medicine as much merger data as possible via public hearings and other public proceedings.

Editor's note: The Association also commented on the breaking news that Cigna plans to acquire Express Scripts in a $67 billion deal.

“The American Medical Association is deeply concerned with the combined impact of proposed mergers among the nation’s largest insurance companies and the country’s largest pharmacy benefit managers," AMA President David O. Barbe, MD, MHA, said. 

The proposed Cigna-Express Scripts deal "magnifies competition issues in the deal between CVS and Aetna," Dr. Barbe added. 

"The AMA will continue to strongly encourage rigorous review of the proposed mergers by state and federal officials to determine if the ramifications of these deals will further restrict access and choice, raise prices and reduce quality care for patients, and avoid harm through further decline in competition,” he said.

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Comments

Good for you AMA.
I think the AMA has analyzed this correctly. There is no evidence to show that other vertical mergers has ever saved consumers money. CVS has history replete with violations from breaking laws (https://violationtracker.goodjobsfirst.org/parent/cvs-health) and they are not likely to change. They will make billions in profits from violating laws, until they get caught, and then pay millions in fines. It is almost a game for them.
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Jul 03, 2018
The Litigation Center of the American Medical Association and State Medical Societies steps in when physicians face powerful adversaries, if legal precedents may be set, and when it is simply the right thing to do.