WOONSOCKET, R.I.—The Department of Justice announced this week that it will allow CVS Health Corp. (CVS) and Aetna Inc. to proceed with their $69 billion merger if they divest Aetna’s Medicare Part D prescription drug plan business for individuals. The proposed divestiture to WellCare Health Plans, Inc. (WellCare), an experienced health insurer focused on government-sponsored health plans, including Medicare Part D individual prescription drug plans, would fully resolve the Department’s competition concerns, its statement read. “Today’s settlement resolves competition concerns posed by this transaction and preserves competition in the sale of Medicare Part D prescription drug plans for individuals,” said Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division.
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“The divestitures required here allow for the creation of an integrated pharmacy and health benefits company that has the potential to generate benefits by improving the quality and lowering the costs of the health care services that American consumers can obtain.”

The Department’s Antitrust Division, along with the offices of five state attorneys general, filed a civil antitrust lawsuit in the U.S. District Court for the District of Columbia to enjoin the proposed transaction, and then currently proposed a settlement that, if approved by the court, would fully resolve the Department’s competitive concerns. The participating state attorneys general offices represent California, Florida, Hawaii, Mississippi and Washington.

CVS, the nation’s largest retail pharmacy chain, and Aetna, the nation’s third-largest health insurance company, are significant competitors in the sale of Medicare Part D prescription drug plans to individuals, together serving 6.8 million members nationwide.

Under the terms of the proposed settlement, Aetna must divest its individual prescription drug plan business to WellCare and allow WellCare the opportunity to hire key employees who currently operate the business. Aetna must also assist WellCare in operating the business during the transition and in transferring the affected customers through a process regulated by the Centers for Medicare and Medicaid Services, an agency within the U.S. Department of Health and Human Services.

CVS operates the nation’s largest retail pharmacy chain, owns a large pharmacy benefit manager called Caremark, and is the nation’s second-largest provider of individual prescription drug plans, with approximately 4.8 million members. CVS earned revenues of approximately $185 billion in 2017.

Aetna, headquartered in Hartford, Connecticut, is the nation’s third-largest health insurance company and fourth-largest individual prescription drug plan insurer, with over two million prescription drug plan members. Aetna earned revenues of approximately $60 billion in 2017.

On Oct. 10, it was also announced that three Aetna directors—Edward J. Ludwig, Fernando Aguirre and Roger N. Farah––executives with “deep insurance company oversight experience”––will join CVS Health’s board. CVS previously announced Aetna’s current chairman and CEO, Mark Bertolini, will join the board.

The merger is subject to state regulatory approvals, many of which have been granted. CVS Health's acquisition of Aetna remains on track to close in the early part of Q4 2018, the company said.