The $69 billion merger between CVS and Aetna is being held up in New York by officials who question the deal's impact on premiums and drug costs.
During a meeting with the Department of Financial Services on October 18, Superintendent Maria T. Vullo said guardrails need to be in place to ensure that the promised synergies of a combined company result in lower premiums and cost savings to New York consumers.
Secondly, Vullo she was concerned that Aetna may create incentives to use CVS services, leading to drug price increases and, as a result, premium increases.
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This week, the New York Post said complaints by independent pharmacists of being hit by CVS with wild, unpredictable fluctuations in reimbursement rates for prescription drugs, has caught the attention of New York regulators. Pharmacy owner Tom D'Angelo reportedly said, "It's like dealing with the mob."
WHY THIS MATTERS
The merger needs only New York State's approval to be a done deal.
The New York Department of Financial Services is taking written comment for five days and is being closed today, Thursday, Oct. 25, after which the department will make a decision.
The Connecticut Insurance Department recently approved the merger.
The Department of Justice earlier this month also gave its approval, pending the divestiture of the Aetna's Medicare Part D prescription drug plan business. Aetna is divesting its Part D plans to WellCare Health Plans.
WHAT ELSE YOU NEED TO KNOW
The top three pharmacy benefit managers, including CVS Caremark, control 70 percent of the business, according to Vullo. The consolidation of existing PBMs with insurers makes it increasingly difficult for new, independent companies to enter the PBM market, Vullo said.
The concern is Aetna could create cost-sharing structures, network designs or other incentives for its members to use CVS services over CVS competitors, creating greater concentration in the retail pharmacy business and harming independent pharmacies.
The DFS also has data privacy concerns. CVS Caremark has access to drug claims data, EHRs and other information from insurers that use its PBM services and presently compete with Aetna. With all that data under one large corporate roof, a data breach would have devastating consequences for consumers, Vullo said.
ON THE RECORD
"It is imperative that any claims of cost savings be specified by the companies from the perspective of the New York consumer, including the numerous Aetna policyholders, and that guardrails are placed to ensure that the promises of today – in order to obtain governmental approval – are actually realized," Vullo said.
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