PROVIDENCE – The American Medical Association has concluded the merger between CVS Health Corp. and Aetna Inc. would be detrimental to the health care industry, and is working to persuade federal and state regulators to oppose the merger, the AMA announced Tuesday.
The AMA argued the deal would reduce competition in the health insurance markets, leading to higher premiums and lower-quality insurance products, and would incur “enormous implantation challenges.”
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At a California Department of Insurance hearing, AMA President Dr. Barbara L. McAneny said the merger would have “tremendous incentive” to maximize profits “by using financial incentives to force patients, as a practical matter, to utilize CVS’ specialty pharmacy for the dispensing or administration of specialty drugs, rather than a treatment setting such as a hospital or a physician office.”
According to CVS, RBC Capital analyst George Hill said of the AMA’s testimony, “In our view, the AMA’s position speaks more to the protectionist bias of the AMA than it does to the implications of the merger. We believe a key component of the merger is CVS Health’s ability to steer consumers from higher-cost practices and emergency departments to lower-cost retail clinics, telemedicine and urgent care centers, thus compromising the pocketbooks of the AMA. As a result, we believe regulators will see through the self-interested protests of the AMA and approve the transaction in the second half of 2018.”
The AMA’s opposition to the merger came after months of consideration, McAneny said, adding, “The AMA is now convinced that the proposed CVS-Aetna merger should be blocked.”
A CVS spokesperson said the company expects to work with the AMA despite the decision to oppose the merger. “We intend to continue to engage in a dialogue with the AMA as we create a community-based integrated model in which doctors, pharmacists, nurses and other health care professionals work together to provide a health care experience that is simpler, more convenient and less expensive. As we go forward, we will work to strengthen the valuable relationships consumers already have with their physicians.”
The AMA largely based its view on evidence that the merger would lead to a rise in market concentration in 88 percent of Medicare Part D regional markets, which it says would result in higher drug spending and out-of-pocket spending.
CVS disagreed, saying that CVS and Aetna are complimentary, and the companies’ proposed model would “help address the rising costs of health care,” and wouldn’t consolidate the health care sector, saying it “reconfigures [the sector] to bring together disparate parts of the health care system that today lead to inefficient, ineffective and costly care.”
Chris Bergenheim is the PBN web editor.
Correction: In the fourth paragraph, quote about AMA’s position on the merger is attributed to an RBC Capital analyst.
