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In a letter to the U.S. Department of Justice, the American Antitrust Institute (AAI) called on the agency to block the proposed merger of retail pharmacy and PBM giant CVS and Big 5 health insurer Aetna. CVS-Aetna would pair up the largest retail pharmacy chain and one of the two largest PBMs with the third largest health insurer in the U.S. The proposed merger raises a number of questions for competition and consumers. The AAI letter focuses on the merger’s potential to enhance the incentive of CVS-Aetna to exclude rivals and facilitate anticompetitive coordination among health insurers served by PBM CVS-Caremark. CVS and Aetna already wield significant market power in the retail pharmacy, PBM, and health insurance markets. High concentration in these markets exacerbates competitive concerns. Market idiosyncrasies heighten the proposed merger’s potentially anticompetitive effects. These include the role of health insurers in paying for most prescriptions filled and of PBMs in managing the flow of prescription drugs to millions of Americans, and PBM markets that lack important transparency.

In a white paper released today “Realigning Merger Remedies with the Goals of Antitrust,” the American Antitrust Institute makes the case for why remedies policy may be at an important inflection point. The paper notes that we do not yet know the full extent to which rising concentration, slowing rates of startups, and widening inequality gaps are the product of the lax antitrust enforcement that has prevailed in U.S. for three decades. But as the story continues to unfold, it remains clear that merger enforcement should be high on the antitrust agenda. 

2018 marks the American Antitrust Institute’s 20th anniversary as the leading independent, nonprofit organization devoted to promoting competition that protects consumers, businesses, and society. In celebration of this important milestone, on Thursday, June 21, 2018, the American Antitrust Institute will host its 19th Annual Conference “Antitrust at a Crossroads: Plotting the Policy Course for the Next Decade.”

The American Antitrust Institute (AAI) seeks to preserve the effectiveness of antitrust class actions as a central component of ensuring the vitality of private antitrust enforcement.[1] As part of its efforts, AAI issues periodic updates on developments in the courts and elsewhere that may affect this important device for protecting competition and consumers. This update covers developments since our Fall 2017 update.

The American Antitrust Institute welcomes Dan Drachler of Zwerling, Schachter & Zwerling, LLP to its Advisory Board.