Skip to main content

Analysis

Cigna–Express Scripts Merger Clears DOJ Antitrust Review

By John Commins  
   September 17, 2018

The megamerger has been cleared by insurance regulators in 16 states. Some hurdles remain, but the two companies hope to complete the deal by year's end.

The U.S. Justice Department's Antitrust Division on Monday gave its approval to the $52 billion deal merging Express Scripts with Cigna Corp.

"The value that we deliver together will help put our society on a far more sustainable path—one that helps health care professionals close gaps in care and supports our customers along their health journey," Cigna CEO and President David Cordani said in a media release

Brad Haller, director in West Monroe Partners' Mergers & Acquisitions practice, says the Cigna-Scripts deal "is doing what everyone else in the healthcare space is doing right now, just on a grander scale."

"They're reacting to continued cost pressures from market forces like the Affordable Care Act, consumerism, and other industry players building scale against each other," he says.

Related: Cigna, Express Scripts, Shareholders Approve $52B Merger

Related: Cigna, Like Express Scripts, Posts Strong Pre-merger Earnings

Haller says DOJ's approval of the deal suggests that federal antitrust regulators are more comfortable with vertical integration.

"Horizontal mergers like Cigna-Anthem and Aetna-Humana were previously blocked," he says. "So the vertical integration we are seeing with retailers (CVS) buying payers (Aetna), and health plans (Cigna) buying prescription benefit plan providers (Express Scripts), is the way industry is going."

"Now that the DOJ has approved and provided certainty, one would expect others to follow suit," he says.   

The deal, which was approved by shareholders of both companies last month, required a waiting period and federal review under the Hart-Rodino Antitrust Improvements Act of 1976. The waiting period expired this week with no objections raised by federal regulators.

Cigna and Express Scripts say they've so far obtain clearances for the merger from insurance regulators in 16 states, but the deal is still subject to outstanding state regulatory approvals.

The two companies hope to complete the merger by the end of the year.

John Commins is a senior editor at HealthLeaders.


KEY TAKEAWAYS

The approval suggests federal regulators are more comfortable with vertical than horizontal integration.

More healthcare companies could model their mergers after the Cigna–Express Scripts deal in light of the DOJ's sign-off.


Get the latest on healthcare leadership in your inbox.