Only one hurdle remains still standing in front of CVS’s $69 billion purchase of Aetna Inc., the No. 3 health insurance company. The U.S. Justice Department has dropped its efforts to block the deal, after several concessions. Likewise, Connecticut, the hometown of Aetna, also approved the merger last week, following CVS’s commitment to keep Aetna in Hartford for the next 10 years. Now, the state of NY is the only thing standing in the way of the merger.
NY officials held a public hearing on October 18th at the Department of Financial Services’ New York City office. “I can stop the deal if it is reasonably necessary to protect New Yorkers,” said Maria Vullo, Department of Financial Services Superintendent, at Thursday’s hearing. She queried CVS and Aetna representatives to provide written confirmation that they would deliver on promises to lower prices. CVS counsel responded that the company does not have a specific plan to lower prices.
As reported by the NY Post, Vullo raised concern that CVS, after borrowing $40 billion to fund the vertical merger, could use its newfound advantages to raise the cost of insurance premiums for 1.1 million New Yorkers. “In our view, there must be a clear enforceable commitment not to transfer the cost of paying back loans to policyholders,” she said.
Vullo is also asking CVS to support a proposed state law requiring Pharmacy Benefit Managers to register with the DFS. This would give the DFS the power to reduce drug prices and limit abusive practices. Vullo questioned CVS lawyer Elizabeth Ferguson, “Will you vocally support the bill?” Ferguson’s brisk reply was, “We would not oppose it.” The head of the Pharmacists Society of the State of New York, Kathy Febraio, agreed that there was a need for PBM regulation. The group was at the hearing along with the Medical Society of the State of New York and several other organizations who urged the state to block CVS’s merger with Aetna NY’s unit. They fear the merger will reduce competition and drive up the cost of prescription drugs. CVS is the nation’s largest pharmacy chain and it also handles prescription plans for 94 million customers.
By Ilana Siyance
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