Big corporations often tout their mergers as promoting efficiency and helping consumers, but too often the public ends up with fewer choices and higher prices. That seems likely to happen again with the latest health care megamerger.
CVS Health and Aetna Inc. recently finalized a $70 million merger, combining one of the nation’s largest pharmacy chains with one of its largest insurers. The companies promise a new and innovative form of health care, with cheaper medication and shorter wait times.
But even though the deal has won approval from the U.S. Justice Department and 28 state regulators, physicians, patients, economists, and advocates aren’t buying it. The American Medical Association, American Antitrust Institute and leading economists across the country warn that this merger will do nothing to curb rising prescription drug costs, stagnating health coverage rates or deteriorating quality of care. In fact, they say it may worsen health care disparities between disadvantaged communities and more affluent populations.
CVS’s newfound power could significantly reduce competition by driving independent pharmacies out of business and forcing other large pharmacy chains to consolidate – driving up prices and increasing premiums and out-of-pocket costs for seniors and low-income patients. Furthermore, this merger will likely force patients with health coverage through Aetna to purchase their medication from a CVS pharmacy, taking away their right to choose.
Big corporations tout their mergers as promoting efficiency and helping consumers, but the public ends up with fewer choices and higher prices.
Earlier this year, testifying before the California Department of Insurance, CVS claimed that its acquisition of Aetna would result in “efficiencies” (read: savings/profits) worth $750 million per year, allegedly by streamlining administrative expenses and negotiating better prices with pharmaceutical companies.
But when asked at the hearing I attended whether these savings would be passed along to patients, CVS was mum. The company’s rep also could not say how it planned to make medication more accessible to low-income and underserved communities, especially those located far from a hospital or clinic. We also asked whether they would expand their contracting with minority-owned businesses, diversify their governing board and senior executives, and add stores in low-income neighborhoods. Their response: Ask us after our merger.
In 2016, the U.S. Department of Justice under the Obama administration blocked two high profile health insurance mega-mergers – between Aetna (yes, the same one) and Humana, and Anthem and Cigna. Both would have obliterated competition in insurance, giving patients and providers across the country little choice but to accept their prices and payments. These mergers would have likely priced many low-income Americans out of health coverage.
In retaliation for blocking their merger, Aetna pulled out of the Affordable Care Act exchanges entirely, abandoning thousands of patients.
Now they expect us to believe they’ll do better. Color us skeptical.
All this comes on the heels of another recently approved merger between another large pharmacy chain and health insurer – Express Scripts and Cigna. Given the growing trend of consolidation among health care companies, expect these companies to continue to sell the same old story that has never come true: Give us more power, and we’ll be better, we promise. Advocates and regulators shouldn’t buy such promises.