Anthem: Lawsuit ‘Unfortunate And Misguided’
(Image courtesy of Anthem Inc.)
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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowThe proposed $54 billion merger of Indianapolis-based Anthem Inc. (NYSE: ANTM) and Cigna Corp. (NYSE: CI) has hit a roadblock. The U.S. Department of Justice has filed a civil antitrust lawsuit to block the move. It also wants to halt the merger of two other "Big Five" health insurance providers, Aetna Inc. (NYSE: AET) and Humana Inc. (NYSE: HUM).
In a statement, Anthem calls the action "an unfortunate and misguided step backwards for access to affordable healthcare for America." The insurance provider adds the DOJ decision is based on "a flawed analysis and misunderstanding of the dynamic, competitive and highly regulated healthcare landscape and is inconsistent with the way that the DOJ has reviewed past healthcare transactions."
During a news conference this morning, U.S. Attorney General Loretta Lynch said the mergers would have a major negative impact on consumers, "drastically restricting" competition. "If the mergers take place, the competition among insurers that have pushed them to provide lower premiums and higher-quality care would be eliminated. The mergers may increase the profits of Aetna and Anthem, but at the expense of consumers across America."
Principal Deputy Associate Attorney General Bill Baer said the plans may be "a convenient shortcut to increase profits," but says they risk becoming unlawful when the consumer benefits of competition are denied. "Anthem’s effort to buy Cigna affects both price competition and quality competition. Cigna is unique in its efforts to innovate, particularly in its efforts to collaborate with doctors and hospitals on wellness programs. They’ve proven popular with lots of employers and their employees, so Anthem has had to respond, it’s had to compete harder by keeping its prices down and by adopting its own innovative strategies to prevent Cigna from winning away a lot of Anthem business."
Anthem has vowed to "remain receptive" to any settlement that would allow the deal to proceed. The company says it will challenge the decision in court.
Shareholders of both companies approved the merger in December. Anthem and Cigna anticipated the deal would be complete by the end of this year.
This story will be updated online and in this afternoon’s INside Edge e-newsletter.