(CN) – The Justice Department on Wednesday gave its preliminary approval to CVS’s $69 billion purchase of Aetna after the two companies agreed to spin off Aetna’s Medicare Part D prescription drug plan business.
CVS, the nation’s largest drugstore chain, announced in December 2017, that it would buy Aetna for about $69 billion in cash and stock.
But the Justice Department immediately expressed concern about the deal due to a potential overlap between the Medicare Part D plans offered by both companies. It said a divestiture of one of the plans was a condition to winning final approval, and on Sept. 27, Aetna announced it had agreed to sell its plan to WellCare Health Plans, of Tampa, Fla., for an undisclosed amount.
The merger combines CVS’ pharmacies with Aetna’s insurance business, and will effectively allow CVS to turn its retail locations into medical offices for basic services.
CVS Health president and CEO Larry Merlo has described the merger as an “opportunity to combine capabilities in technology, data and analytics to develop new ways to engage patients in their total health and wellness.”
“Our focus will be at the local and community level, taking advantage of our thousands of locations and touchpoints throughout the country to intervene with consumers to help predict and prevent potential health problems before they occur,” he said in a statement. “Together, we will help address the challenges our health care system is facing, and we’ll be able to offer better care and convenience at a lower cost for patients and payors.”
In a proposed settlement filed in the federal court in Washington, D.C. on Wednesday, the Justice Department said Aetna has agreed not only to divest its individual prescription drug plan business to WellCare, but will also allow the company to hire key employees currently operating the business.
Aetna has also agreed to assist WellCare in operating the business during the transition and help affected customers transfer to the new provider.
Assistant Attorney General Makan Delrahim said Wednesday that “the divestitures required here allow for the creation of an integrated pharmacy and health benefits company that has the potential to generate benefits by improving the quality and lowering the costs of the healthcare services that American consumers can obtain.”
The attorneys general from California, Florida, Hawaii, Mississippi, and Washington participated in the settlement.
CVS’s Merlo said the Justice Department’s approval “is an important step toward bringing together the strengths and capabilities of our two companies.”
“We are pleased to have reached an agreement with the DOJ that maintains the strategic benefits and value creation potential of our combination with Aetna,” Merlo said. “We are now working to complete the remaining state reviews.”