Cigna gets DOJ approval to buy St. Louis based Express Scripts

Justice Department OKs Cigna's $52 billion acquisition of Express Scripts

The U.S. Department of Justice has given an earlier-than-expected all-clear to Cigna Corp.'s quest to acquire pharmacy benefits manager Express Scripts, a move that presages further consolidation among those left standing alone in the health-care sector.

While the federal antitrust division will not seek to block the merger, the deal is still subject to state regulators and various departments of insurance.

Express Scripts shares rose 3.7 percent to $95.23 at the close of trading in NY. The merger is unlikely to lessen competition substantially in the sale of PBM services because Cigna's PBM business nationwide is small, the DOJ stated. "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". Express Scripts also owns specialty pharmacies that distribute pricey drugs.

Cigna and Express Scripts said 16 states have approved the merger already.

"If Cigna is allowed to become the latest in the trend to take PBM needs in-house, it is more likely that consumers could end up at the mercy of a handful of giants - each with its own siloed services - and the choices they now enjoy for medical care and pharmacy needs becoming a thing of the past", Consumers Union senior policy counsel told US lawmakers earlier this year.

Officials at Bloomfield, Conn. -based Cigna and St. Louis-based Express Scripts have said their merger would drive higher quality care and affordability by offering insurance and pharmacy services under one roof.

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"Both insurers and pharmacy benefit managers serve as middlemen for employers and governments, and the proposed mergers are an attempt to convince their customers that they are working to reduce costs", Reed Abelson observes for the New York Times. "... The Justice Department review of CVS's planned purchase of Aetna may conclude this month, but will take longer because of divestitures needed to resolve competitive concerns, a source familiar with the matter told Reuters". CVS and Aetna shares also rose, closing up 1.5 percent and 1 percent, respectively.

Some analysts say the tie-up should help control costs by merging drug and medical benefits management, though the deal was criticized sharply by activist investor Carl Icahn as making little sense.

The Justice Department's approval of the Cigna-Express Scripts deal did not come as a shock.

Regulators spent six months on the investigation, reviewed more than 2 million documents and interviewed more than 100 people from within the industry before reaching their conclusion, DOJ said.

Express Scripts at the time was concerned about continuing as a standalone PBM when so many competitors were consolidating and new entrants like Amazon were rumored to be scoping out the healthcare market.

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