Cigna and Express Scripts, based in St. Louis, announced the deal in March, saying it would help control health care costs as consolidation picks up in the insurance and pharmacy benefits management industries. Cigna and Specific Scripts acknowledged they've already bought clearances for the deal from departments of insurance in 16 states and are working with regulators in last jurisdictions to invent clearance for the merger.
The Department of Justice on Monday said it will not challenge Cigna's $67 billion acquisition of Express Scripts because the deal "is unlikely to result in harm to competition or consumers". The merger is unlikely to lessen competition substantially in the sale of PBM services because Cigna's PBM business nationwide is small, the DOJ stated. Express Scripts shares closed at $95.23 and Cigna's closed at $197.84.
Cigna said it looked to buy a pharmacy benefit manager because the pharmacy benefit is used nearly twice as frequently as the next closest health care benefit and represents about 20 percent of employer-based insurance benefits. If both deals close successfully, the nation's largest PBMs will all be aligned with the three largest payers, creating impressive, vertically-integrated healthcare entities.
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The deal combines a health insurer and a company that helps negotiate lower prices for prescription drugs in the form of rebates on behalf of health plans.
California's Attorney General in particular has blasted the proposed Aetna-CVS union, citing anti-competitive impacts, and asked the Justice Department to block it.
The Justice Department's approval of the Cigna-Express Scripts deal did not come as a shock.
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"We are pleased that the Department of Justice has cleared our transaction and that we are another step closer to completing our merger and delivering greater affordability, choice and predictability to our customers and clients as a combined company", said David Cordani, president and chief executive officer of Cigna, in a statement.
Yesterday's approval "bodes well for the pending USA antitrust review of CVS Health Corp's proposed $69 billion acquisition of health insurer Aetna Inc.", writes Reuter's Caroline Humer.
Cigna's purchase of Express Scripts comes as PBMs' role in prescription drug costs has come under scrutiny.
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CVS spokeswoman Carolyn Castel said the company continues to expect to close its deal late in the third quarter or in the fourth quarter, a forecast it gave investors on August 8 during a conference call. The agency had asked for more information from the companies back in April. CVS and Aetna shares also rose, closing up 1.5 percent and 1 percent, respectively. Cigna pursued Express Script with the idea that the two could further Cigna's goals of value-based care delivery by managing the medical, pharmacy and behavioral aspects of healthcare holistically.