AET/CVS: Part D Overlaps Lessened by Revenue Share and Medicare Advantage, Companies Argue to US States

Event Driven Takeaways

  • In state-level regulatory filings, CVS and Aetna have argued that market share figures should be based on percentage of revenue/premiums rather than enrollment/lives. This approach aims to reduce the market share of the merging companies.
  • CVS and Aetna have also sought to downplay their Part D market share by arguing for the inclusion of Medicare Advantage in the relevant market. This argument runs counter to the federal district court’s ruling in favor of the DOJ’s case to block the attempted Humana/Aetna deal.
  • The companies also argue that when Medicare Advantage Part D plans are included in the same market as standalone Part D plans, a combined Aetna/CVS would have significantly less market share.
  • However, Event Driven’s analysis of Part D premiums data reveals that there is a significant difference in average monthly premiums between MA-PD and standalone PDP. Furthermore, there exist significant differences in cost sharing arrangements between the two types of plans, with average drug co-pays varying widely between the two.

As CVS and Aetna pursue state-level approvals, the companies are making several novel arguments regarding their horizontal overlaps in Medicare prescription drug markets. Clearly, the main antitrust risk to the Aetna/CVS deal is at the federal level, as the DOJ examines vertical issues such as foreclosure - specifically, whether the merged company would disadvantage rivals in the pharmacy or PBM arenas. However, the companies have obvious horizontal overlaps in Part D, as