WOONSOCKET, R.I. (WPRI) – An Arkansas lawmaker is asking Attorney General Jeff Sessions to “thoroughly review” CVS Health’s proposed takeover of insurer Aetna, expressing “grave concern” that the $69-billion deal could harm independent pharmacies and rural consumers.
The merger “could potentially destroy competition in the health care industry and would encourage further consolidation, imperiling consumer choice and increasing costs for prescription medications,” Arkansas Congressman Rick Crawford argued in a March 7 letter to both Sessions and the head of the Federal Trade Commission.
Crawford, a four-term Republican, cited the complaints of the Arkansas Pharmacists Association, which accuses CVS of underpaying independent pharmacies through its pharmacy-benefit management (PBM) division. He asked Sessions and the FTC to look not just at the merger but at the effects of CVS owning both retail drugstores and a major PBM.
“The free enterprise system in America was based on the ideal that business ownership and entrepreneurship can operate and be profitable without the threat of a monolithic power standing in the way,” he wrote. “Community pharmacies in rural America – like those in my district – stand to lose the most, if not all, of their consumers when market consolidations occur.”
Crawford sent his letter shortly after the U.S. House subcommittee that deals with antitrust issues held a hearing where lawmakers expressed little concern about the CVS-Aetna merger. The committee’s top Democrat is David Cicilline, who represents CVS’s hometown of Woonsocket and who has muted his usual criticism of corporate consolidations on the Aetna transaction.
Yet the proposed deal has critics across the political spectrum, aligning Crawford with Democratic U.S. Sen. Elizabeth Warren of Massachusetts, who said in December she was “very concerned” about the CVS-Aetna transaction.
Mike DeAngelis, a CVS spokesman, defended the company’s PBM services. He said the company is committed to “managing costs” while offering “a broad network of pharmacies that includes local, independent pharmacies.”
“The Arkansas Pharmacists Association (APA) is painting an overall skewed picture of how CVS Caremark reimburses pharmacies,” DeAngelis added. “We believe that independent pharmacies in our network are reimbursed fairly and that we are in compliance with Arkansas state law.”
He added, “It is important to note that APA has repeatedly refused to share specific claims data with us to validate their allegations.” (Arkansas is also home to Walmart, a major CVS competitor.)
CVS and Aetna shareholders voted earlier this week to approve the proposed merger, which executives say they hope will close in the second half of this year if it wins approval from federal regulators. “When this merger is complete, the combined company will be well-positioned to reshape the consumer health care experience,” CVS President and CEO Larry Merlo said after the vote.Ted Nesi (email@example.com) covers politics and the economy for WPRI.com. He is a weekly panelist on Newsmakers and hosts Executive Suite. Follow him on Twitter and Facebook