WOONSOCKET— CVS Health Corp. has secured the final two state regulatory approvals of its $68 billion acquisition of Aetna Inc., making commitments on cybersecurity, rate protection and $40 million for health insurance education and enrollment in New York.
The two companies now expect to close the deal on Nov. 28. CVS announced the final hurdles to the deal had cleared in a two-sentence SEC filing Monday morning, mirrored by an in-depth account of the agreements New York’s Department of Financial Services secured on its own website.
Joe Goode, senior director of corporate communications for CVS, referred questions about the final approvals to the company’s SEC filing. Goode said the company had also been waiting on approval from New Jersey, which it received on Friday.
New Jersey’s department of banking and insurance approved the deal with no conditions, according to an order posted to their website dated Nov. 20., signed by Commissioner Marlene Caride.
Following an Oct. 18 public hearing on the acquisition, Maria Vullo, the New York State superintendent of financial services, had expressed concern that the acquisition would threaten the state’s local businesses and independent pharmacies.
She also noted concerns about the impact of the merger on premiums and pharmaceutical costs; whether the concentration of consumer data the merger would create will be properly safeguarded; whether there are assurances that New York residents would not bear the burden of the $40 billion debt CVS will assume to acquire Aetna; and whether CVS and Aetna will commit to support the Affordable Care Act.
On Monday, New York’s DFS posted several commitments CVS had made to state officials as conditions of its approval of the deal:
As part of DFS’s approval, CVS has agreed to specific conditions that the Department demanded to protect New York consumers, including:
- No funds from any Aetna company or affiliate covering New Yorkers can be used to pay for CVS’s acquisition
- Costs derived from the acquisition, including executive compensation, cannot be passed on to any domestic or foreign Aetna New York insurer
- Increased health insurance rates cannot be sought in New York to pay for the cost of the acquisition and premiums and cost-sharing owed by policyholders cannot increase
- Dividends cannot be paid by Aetna without the express prior approval of the DFS superintendent for a period of three years
- Annual reports for three years documenting details of the progress toward achieving promised synergies must be provided to DFS
- Current products throughout the Aetna New York service area must be maintained for three years following the approval
- One or more new products must be made available by Aetna to the small and large group markets within two years from the approval through an existing or new New York-domiciled insurer
- Roll-out of health care measures must be done fairly and equitably in New York, including in under-served communities
- CVS will pay $40 million to New York, over a three-year period, to support health insurance education and enrollment activities and strengthen New York health care transformation activities, which may include payments to the New York State Health Care Transformation Fund.
- An independent third-party audit assessing whether Aetna employees have accessed confidential information in violation of firewall policies submitted to DFS within one year of the approval
- Adherence to DFS’s nation-leading cybersecurity regulation, including filing the required annual certificates of compliance to DFS
- No preferential pricing to any Aetna-affiliated health insurer licensed in New York, including any managed care organization certified in New York, that considers the fact that the health insurer is Aetna-affiliated
- Ensuring that participating provider networks for insured products maintain access to non-chain New York pharmacies for three years from the approval
Rob Borkowski is a PBN staff writer. Email him at Borkowski@PBN.com.
