Connecticut’s head insurance regulator approved the sale of Hartford-based Aetna to CVS, contingent upon the pharmacy giant providing confirmation it had complied with a requirement to divest a Medicare drug plan and other terms.
The move had been expected after a Connecticut Insurance Department official had recommended approval of the $69 billion deal, and coming on the heels of the U.S. Department of Justice giving its OK provided Aetna sell its standalone Medicare Part D prescription drug plans to WellCare Health Plans, with Aetna having about 2.2 million members in the program.
Woonsocket, R.I.-based CVS aims to complete the deal imminently as it completes state regulatory reviews. In Aetna, the company picks up the third-largest health insurance carrier in the United States with more than 22 million members entering this year.
With nearly 400,000 members in Connecticut, Aetna ranks just ahead of Cigna as the second largest carrier in the home state of the two health giants. Anthem is the market leader with more than 1 million members.
The companies hope to add $750 million to their combined bottom line by their second year of operation as one, without specifying any impact on jobs. Under the order signed by Katharine Wade, commissioner of insurance in Connecticut, Aetna must divulge its employment numbers in the state on a quarterly basis, which totaled nearly 5,300 people entering October.
Speaking in mid-September at a New York City investment conference sponsored by Morgan Stanley, CVS CEO Larry Merlo said the merger is intended to put patients at the center of their own care.
“This challenge around (health) cost, quality and access continues to evolve for many — and it’s a challenge,” Merlo said in September. “The need for change is clear. We envision the combination of CVS and Aetna to be a leader in that change.”
Aetna incorporated in 1853, taking its name from Italy’s Mt. Etna and nearly liquidating within four years of its launch. Focused initially on life insurance, Aetna began selling health coverage in 1899 while adding other kinds of insurance, including issuing a policy in 1944 on the Manhattan Project to build the world’s first nuclear bomb.
Aetna would sell its property and casualty business to The Travelers in 1996 for $4 billion, and its financial services division to ING, now known as Voya, in 2000 for $7.7 billion, with both companies continuing to maintain major operations in the Hartford area to this day.
CVS executives scotched Aetna CEO Mark Bertolini’s plan to move the insurer’s headquarters to New York City with incentives. As the company readies to integrate Aetna fully into its operations, it is already looking ahead at other ways to reshape itself with the times — particularly as Amazon readies to add an online pharmacy counter to its dominant website.
“We see the front of our store evolving from not just selling thousands of products,” Merlo said. “Certainly there will be a product component, but there will also be a service component. The products will have a focus on health, beauty, personal care and elements of convenience, and the service component will be an element hard to replicate online.”
Includes prior reporting by Dan Haar.
Alex.Soule@scni.com; 203-842-2545; @casoulman
