US: Republican Congressman comes out against CVS-Aetna merger

US Representative Rick Crawford (Republican-Arkansas) has sent letters to federal regulators stating his “grave concern” over the proposed acquisition of Aetna, one of the nation’s largest insurance companies, by CVS Health, a Rhode Island-based health care conglomerate that has been at the center of a political showdown in Arkansas.

The congressman wrote that CVS Caremark, a subsidiary of CVS Health, has “run amok in my state by severely undercutting reimbursements to pharmacists.” CVS Caremark is a pharmacy benefits manager, a middleman company that negotiates drug prices with manufacturers on behalf of insurance carriers. PBMs also handle retail pharmacy claims.

More broadly, Crawford is raising the issue of whether large vertical mergers like CVS-Aetna harm consumers. The combined companies would have more than US$240 billion in annual sales and would be involved in selling insurance, negotiating drug prices between drugmakers and insurers, and running a major pharmacy chain, according to company data from Bloomberg Law.

If the Department of Justice and the Federal Trade Commission take Crawford up on his request, the drug distribution system, including not only pharmacy benefit managers, insurers, and pharmacies but also drug distributors and wholesalers like McKesson and Cardinal Health, could come under the microscope of antitrust regulators.

Full Content: Crawford House & Bloomberg

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