A federal judge on Wednesday formally approved CVS Health’s nearly $70 billion takeover of Aetna, clearing the last hurdle for the mega-deal among health industry powerhouses.
The Justice Department approved the merger last year on the condition that the companies sell Aetna’s Medicare drug business to preserve competition, and every state signed off on the merger between one of the country’s largest insurers and one of the largest pharmacy benefit managers.
“CVS Health and Aetna have been one company since November 2018, and today’s action by the district court makes that 100 percent clear,” the company said in a statement. “We remain focused on transforming the consumer health care experience in America.”
U.S. District Judge Richard J. Leon initially ordered hearings after he said the Justice Department and the companies acted like his approval was a mere “rubber stamp.” The companies had closed the deal just one month after reaching an agreement with federal regulators, which angered Leon.
On Wednesday, Leon officially signed off on the agreement reached between the two companies and federal regulators.
Leon said in his ruling that groups challenging the merger were unable to show that it would result in CVS gaining the ability to steer patients away from their current providers.
“The markets at issue are not only very competitive today, but are likely to remain so post-merger,” Leon wrote. “Consequently, the harms to the public interest the [opponents] raised were not sufficiently established to undermine the Government’s conclusion to the contrary.”
Merger settlements negotiated between the Justice Department and companies require court approval, but Leon’s involvement and his decision to hold hearings was highly unusual.
Antitrust experts have said it’s unheard of for a federal judge to force companies to make substantial changes to a merger, even if the judge has some authority to question a federal settlement.
The merger was opposed by groups including the American Medical Association (AMA), which urged federal regulators to block the deal because of anti-competitive concerns.
“Today’s decision ultimately fails patients, will likely raise prices, lower quality, reduce choice, and stifle innovation,” AMA president Patrice A. Harris said in a statement. “Nothing in the deal guarantees reductions on insurance premiums or prescription drug costs. As for promised efficiency savings, that money will likely go straight to CVS’s bottom line.”