© Reuters Photo File: CVS Health and Signifyhealth logos are seen in an illustration taken on September 5, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
By Diane Bartz
WASHINGTON (Reuters) – CVS Health Corp’s (NYSE: ) plan to buy a home health care services company for about $8 billion will face a tough U.S. antitrust review, three experts said, even though the two companies do not compete directly in any market. on Tuesday.
High and soaring health care costs that put even older drugs like insulin out of reach of the poor have severely hampered US presidential administrations’ determination to cut rising costs. The Federal Trade Commission has long emphasized health deals, and continues to do so under new Chairwoman Lena Khan.
CVS said on Monday it has agreed to buy CVS for $30.50 in cash plus nearly $400 million in equity appreciation in a deal that will allow CVS to provide patients with more care management at their homes. CVS operates pharmacies, pharmacy benefits and Aetna insurance plans.
Bloom’s strategic adviser, Seth Bloom, and former general counsel of the U.S. Senate Judiciary Committee’s antitrust subcommittee, predicted the deal would be reviewed by the FTC, saying, “I think it will pass in the normal course of time.”
“It’s going to be tough to get through the FTC under Lena Khan.”
Bloom was one of three antitrust experts who said the proposed merger could face antitrust headwinds. If the FTC doesn’t review the deal, it will be investigated by the Justice Department.
David Balto, an antitrust attorney who has previously fought large health care deals, agreed. “Agencies know they need to shift their focus to vertical acquisitions and they can be used strategically to remove barriers to entry,” he said. Vertical agreements, in which companies merge with the supplier, may also work with the buyer’s competitors.
Balto argued that CVS’s plan to buy CineFine raised the same concerns as UnitedHealth Group’s (NYSE: ) $8 billion deal to buy Transforming Healthcare (NASDAQ: ), which the government sued to block. The case is set to be decided by a judge in the coming weeks.
CVS emphasized in its comments that the Signify deal was not between competitors, something that often mitigates antitrust cases. “We are not competitive and have no overlapping activities,” said spokesman TJ Crawford.
Andre Barlow, an antitrust attorney with Doyle, Barlow & Mazard PLLC, said the FTC may be concerned because the deal would strengthen CVS, which is already a health care powerhouse.
“The FTC will certainly take it very seriously to ensure that there is no harm to competitors and patients,” he said in an email interview, citing concerns about vertical agreements.