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Justice Department approves $69-billion merger between CVS Health and Aetna

James F. Peltz, Los Angeles Times on

Published in Business News

CVS Health Corp.'s plan to buy Aetna Inc. for $69 billion was cleared by U.S. antitrust regulators Wednesday, paving the way for the nation's largest pharmacy chain to acquire one of the largest healthcare insurers.

The deal was approved because Aetna has agreed to sell its Medicare prescription-drug business, or Medicare Part D, to WellCare Health Plans Inc., which the Justice Department said "would fully resolve the department's competition concerns."

CVS said the Aetna deal remained on track to close in the current quarter.

"We are pleased to have reached an agreement with the DOJ that maintains the strategic benefits and value-creation potential of our combination with Aetna," CVS Health Chief Executive Larry Merlo said in a statement.

The CVS-Aetna marriage is part of a wave of consolidation rolling across the U.S. healthcare industry. The major players are bulking up and diversifying their product and service offerings in the face of uncertainty about the direction of the nation's healthcare policy, threats of heightened competition and a desire to streamline their combined operating costs and to gain leverage for negotiating lower drug prices.

Cigna Corp., another health insurer, agreed early this year to buy pharmacy benefits manager Express Scripts Holding Co. for about $52 billion, a deal that also has received clearance from the Justice Department.

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Internet retail giant Amazon.com agreed in June to acquire online pharmacy PillPack for an undisclosed price.

Amazon and two other major U.S. companies, the bank JPMorgan Chase & Co. and billionaire Warren Buffet's conglomerate Berkshire Hathaway Inc., also announced a joint plan to find ways of reducing healthcare costs for their U.S. employees -- which many viewed as a precursor of more disruption in the industry.

And another drugstore chain, Rite Aid Corp., had planned to be purchased by grocery operator Albertsons Cos., which also owns Vons and Safeway. But that deal was scuttled in August amid opposition from some Rite Aid stockholders.

CVS, based in Woonsocket, R.I., operates about 9,800 drugstores -- including more than 1,150 in California -- and it's a pharmacy benefits manager under the Caremark brand. CVS' revenue last year totaled $178 billion.

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