WASHINGTON (CN) – A federal judge in Washington approved a settlement Wednesday that will allow CVS and Aetna to go forward with a $69 billion merger.
In a 22-page opinion, U.S. District Judge Richard Leon wrote the merger – which would combine the largest chain of pharmacies in the United States with the third-largest health insurance company in the country – is in the public interest.
“Although amici raised substantial concerns that warranted serious consideration, CVS’s and the government’s witnesses, when combined with the existing record, persuasively support why the markets at issue are not only very competitive today, but are likely to remain so post-merger,” Leon wrote.
Leon’s action approves an agreement the companies struck with the Justice Department that requires Aetna to divest its Medicare Part D prescription drug plan to WellCare Health Plans, one of the top Medicare Part D providers in the country, for the merger to go forward.
In his opinion, Leon dismissed concerns that sloughing off Aetna’s plans to WellCare would not do enough to preserve competition in the market for prescription drug plans. He found WellCare has shown it can compete on its own by growing its business by some 500,000 members even before taking on the divested assets.
“The moderate concentration in the [prescription drug plan] market has neither prevented WellCare from competing in the market, nor prevented price competition from driving premium prices down, in recent years,” Leon wrote.
CVS and Aetna announced the merger in 2017 and finalized it this past November. The companies hailed Leon’s decision in a statement Wednesday.
“CVS Health and Aetna have been one company since November 2018 and today’s action by the district court makes that 100% clear,” the companies said in a statement. “We remain focused on transforming the consumer health care experience in America.”
Makan Delrahim, the assistant attorney general for the Justice Department’s antitrust division, also praised Leon’s decision, saying it will help preserve competition in a key marketplace.
“The divestiture of Aetna’s individual [prescription drug plan] business provides a comprehensive remedy to the harms the Justice Department identified,” Delrahim said in a statement. “The entry of the final judgment protects seniors and other vulnerable customers of individual PDPs (Medicare Part D prescription drug plans) from the anticompetitive effects that would have occurred if CVS and Aetna had merged their individual PDP businesses.”