On January 23, 2017, the United States District Court for the District of Columbia granted the Department of Justice, Antitrust Division’s (DOJ) request for an injunction to block Aetna Inc.’s (Aetna) proposed acquisition of Humana Inc. (Humana) for $37 billion.  The court held that allowing the merger to move forward would reduce competition for Medicare Advantage plans in 364 counties and in public exchanges in certain counties in Florida.  The court’s opinion is available here. 

Last summer, the DOJ challenged the proposed merger between Aetna and Humana, alleging that the transaction would lead to higher health insurance prices, reduce benefits for consumers, and stifle innovation.  The DOJ’s challenge was joined by the District of Columbia and eight states: Delaware, Florida, Georgia, Iowa, Illinois, Ohio, Pennsylvania, and Virginia.  Arguments at trial focused on the appropriate product market definition, with Aetna claiming that Medicare Advantage should be considered in the same product market, and therefore competitive with, traditional Medicare.  The court disagreed, finding that Medicare Advantage was a separate market, because traditional Medicare was not a sufficiently close substitute for Medicare Advantage plans.  According to the court, because Aetna and Humana have a significant share of, and are close competitors in, the Medicare Advantage market, the merger would have had an anticompetitive effect. 

The court’s opinion also addressed Aetna’s decision to pull out of the Affordable Care Act health insurance marketplace exchanges in seventeen counties.  Aetna claimed to have withdrawn from the exchanges for business reasons so it could not be considered a competitor of Humana in those markets, but the court determined that Aetna withdrew from those particular market to improve its position in litigation.  The court held that Aetna would likely offer plans on the exchanges in only three complaint counties in Florida in 2018 and beyond, and the merger would lessen competition in those counties.

Aetna has sixty days from the date of the court’s decision to file an appeal.  However, the merger agreement between Aetna and Humana expires on February 15, 2017.  Pursuant to the terms of the agreement, Aetna will owe Humana a payment of $1 billion if the merger agreement expires.  For further analysis of the decision, see King & Spalding’s Client Alert available here.

The DOJ has also challenged the proposed $54 billion merger between Anthem Inc. and Cigna Corp.  The trial in United States et al. v. Anthem, Inc. et al., Case No. 1:16-cv-01493, has concluded and is awaiting judgment.