Government

Grassley wants closer scrutiny of insurance deals

Four companies would cover a large number of enrollees

Rafael Suanes/TNS

Senate Judiciary Committee Chairman Chuck Grassley has asked the Justice Department to take a closer look at corporate deals involving Aetna and Cigna.
Rafael Suanes/TNS Senate Judiciary Committee Chairman Chuck Grassley has asked the Justice Department to take a closer look at corporate deals involving Aetna and Cigna.

Blockbuster health care acquisitions involving two Connecticut insurers could reduce competition in prescription drug pricing and deal a blow to consumers, Iowa’s Sen. Chuck Grassley, chairman of the Senate Judiciary Committee, said as he asked the U.S. Department of Justice to take a closer look at the corporate deals.

Regulators are reviewing a $69 billion acquisition of Hartford-based Aetna by CVS Health and the $67 billion purchase of Express Scripts Holding by Cigna in Bloomfield.

Grassley on Tuesday cited a report by the Kaiser Family Foundation detailing industry concentration. The proposed mergers of CVS Health and Aetna and Cigna and Express Scripts would result in further consolidation of the Part D marketplace, the Kaiser report said.

Part D is Medicare’s prescription drug program.

“If these mergers go through, four firms — the two merged firms plus UnitedHealth and Humana — would cover 71 percent of all Part D enrollees and 86 percent of stand-alone drug plan enrollees, based on 2018 enrollment,” Kaiser said.

Grassley said in a letter to Makan Delrahim, the assistant attorney general who heads the Department of Justice’s antitrust division, that over the past several years, consumers “have faced substantial increases in drug prices across the board.”

He warned that the transactions would result in substantial integration with insurance companies in the pharmaceutical supply chain. The three largest pharmacy benefit managers — which help employers manage costs — are integrated with insurance companies, Grassley said.

Carolyn Castel, a spokeswoman for CVS, said the intent of the Aetna deal “is to create a new health care model that will help consumers improve their health by focusing on prevention and primary care, simplifying their health care experience and reducing costs.”

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CVS is in “productive discussions” with regulators, including Justice Department officials, she said.

Cigna said that with Express Scripts, “we will expand choice, improve affordability, increase innovation that is needed in the U.S. health care system and enhance alignment and transparency for customers, clients and health plans.”

The insurer said it’s optimistic regulators will back the deal.

Sen. Richard Blumenthal, D-Conn., a member of the Senate Judiciary Committee, said in an emailed statement he will try to make sure Justice Department officials ask the “right questions,” such as what impact the deals will have on prescription drug prices, competitors, hospitals and other industry players.

Grassley said Congress has a role in encouraging “new strategies and experimentation” among hospitals, physician groups, insurers, pharmacy benefit managers, pharmacies, wholesalers, pharmaceutical manufacturers and others in the supply chain to help reduce costs.

The proposed transactions may improve efficiency but also could lead to increased barriers to entry for competition, Grassley said.

Critics of the deals have cited competition and consumer choice. The American Medical Association criticized the Aetna-CVS deal, saying it will leave consumers with fewer health care choices.

Cigna and Express Scripts have defended the deal, which supporters say could help control health care costs as consolidation picks up in the insurance and pharmacy benefits management industries.

Executives say the CVS-Aetna deal will integrate the work of doctors, pharmacists, other health care professionals and health benefits companies to establish an easier-to-use and less expensive platform for consumers.

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