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CVS Gets Final Approval to Acquire Aetna

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Regulators in New York state today gave CVS Health Corp. the final regulatory approval the company needed to acquire Aetna Inc.

CVS — a Woonsocket, Rhode Island-based drug store chain and pharmacy benefits manager (PBM) founded in 1964 — said that it now expects to close on its acquisition of the health insurer Wednesday.

Maria Vullo, the New York State financial services superintendent, said in a ruling on the deal released today that she does not believe that CVS has provided a clear, concrete plan for making sure that the deal reduces costs or improves health outcomes for Empire State residents.

(Related: Dear Connecticut: CVS Can’t Afford Aetna. Sincerely, New York)

But Vullo said that she has the authority to affect only a small part of the deal in connection with her concerns, not the deal as a whole.

The New York department “has determined that obtaining commitments from CVS Health and Aetna Inc. to address these concerns better serves the people of the state of New York than would disapproval of the application,” Vullo said.

Vullo said she has tried to increase the odds that the deal will be good for New York state residents by setting a number of conditions. The conditions include commitments from CVS that:

  • No funds from any Aetna company or affiliate covering New Yorkers will be used to pay for the deal.
  • CVS cannot increase premiums or cost-sharing amounts for New Yorkers to pay for the deal.
  • Aetna cannot pay dividends to CVS without prior approval from New York state regulators for at least three years.
  • The Aetna products now available in New York state must continue to be available for at least three years.

The New York department “will use all regulatory tools, including special reports, to review the past and future conduct of CVS Health, CVS Pharmacy, and CVS Caremark, as well as Aetna Inc. and its affiliates, and take every action necessary to ensure that the representations made in the course of this approval were fully accurate and that the parties keep all commitments made,” the department said in a press release announcing Vullo’s ruling.


The Aetna life and health business was founded in 1853.

The company survived a devastating national financial panic in 1857, and many panics, depressions and epidemics since.

Many famous people, including Robert Heinlein, the science fiction author, spent at least some time working for Aetna.

The company now provides or administers major medical for about 38 million, and it generated about $1.9 billion in net income on $61 billion in revenue in 2017.

Like other large health insurers, the company has run into challenges because of uncertainty in Washington about how the country ought to regulate and subsidize health coverage for working-age adults.

Aetna executives made optimistic forecasts when the company began offering health coverage under the Affordable Care Act framework in late 2013. Aetna executives’ views darkened over the years, as the federal government refused to make good on the payment arrangements made through the ACA risk corridors program and the ACA cost-sharing reduction subsidy program.

— Read Walgreens and Humana Discussing Equity Stakes: WSJon ThinkAdvisor.

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