05
JUN
2019

Petris Center analysis part of AMA Report regarding Aetna-CVS Merger

The American Medical Association (AMA) addressed the U.S. Department of Justice (DOJ) regarding the Aetna-CVS merger, using research from Professor Scheffler and the Petris Center:

This merger is popularly described as vertical when, in fact, horizontal concerns are also substantial. Aetna and CVS compete in the Stand-Alone Medicare Part D Prescription Drug Plan (PDP) market that covers 25 million people nationally. Whether this merger of rivals in the PDP market runs an appreciable risk of substantially lessening competition is easily determined by a straightforward application of the DOJ and Federal Trade Commission (FTC) 2010 Horizontal Merger Guidelines (Merger Guidelines). University of California, Berkeley, health economics professor Richard Scheffler, PhD, has done that analysis. He finds that under the Merger Guidelines, in all but four of the 34 PDP regional markets, this merger would either be “presumed to be likely to enhance market power” or would “potentially raise significant competitive concerns and often warrant scrutiny.” Professor Scheffler concludes that this merger would raise PDP premiums in markets across the country, including California.

The full report is linked here