NEW YORK – Aetna Inc. said it plans to sell its Medicare prescription-drug business to WellCare Health Plans Inc., a key step toward completing its $67.5 billion merger with CVS Health Corp.
Financial terms of the deal weren’t disclosed. In a securities filing, Aetna said that the “purchase price is not material” to the company. The divestiture of the Medicare Part D plans to WellCare may help resolve objections to the CVS-Aetna deal from U.S. antitrust regulators.
“Aetna believes the divestiture is a significant step toward completing the U.S. Department of Justice’s review” of the CVS deal, the company said in the filing.
CVS has said that selling off some Medicare prescription-drug plans wouldn’t have a material impact on the expected benefits of the Aetna deal, because they’re a small portion of the combined firm’s overall business. CVS is a drugstore giant, and manages drug benefits for employers and insurers, while Aetna is the No. 3 U.S. health insurer, with about 22 million members.
WellCare, a smaller health insurer that’s based in Tampa, Florida, has been using deals to fuel its expansion. The company completed a $2.5 billion deal for the health insurer Meridian in early September, adding about 1.1 million insurance customers to its base of 4.4 million members. As a sign of its growth, WellCare was added to the S&P 500 Index this month.
Medicare Part D plans offer prescription-drug insurance for the elderly and disabled, subsidized by the federal government. As of June, CVS had the biggest Part D business, with about 6.1 million customers, while UnitedHealth Group Inc. was No. 2 at 5.4 million members, according to data compiled by Bloomberg. Aetna was smaller, with about 2.2 million members.
