Federal And State Governing Bodies Approvals For Healthcare M &A

Under the Under the Hart-Scott-Rodino Antitrust Improvements Act, the Department of Justice (DOJ) and Federal Trade Commission (FTC) have jurisdiction over M&A activity of a certain size which may affect commerce.[1] Transactions which may trigger an anticompetitive effect are reviewed by the (DOJ) and the (FTC) for approval. Healthcare M&A transactions regularly consist of multibillion-dollar deals and are formed with the purpose of consolidating the market and are regulated by the DOJ and FTC.

When reviewing a potential transaction, the DOJ analyzes the proposed deal to determine if the transaction would “substantially lessen competition”[2] if allowed to be executed. Two recent Healthcare M&A transactions which were subject to DOJ review were CVS Health Corporations desired purchase of Aetna Inc. and Cigna Corps take over Express Scripts Holding Company. Both cases were held to the “substantially lessen competition” and allowed to proceed. However, the CVS-Aetna deal was approved on the condition that Aetna’s Medicare prescription drug business be divested from the deal.

State Antitrust laws must also be considered when entering into a healthcare M&A transaction. States have their individual state-specific antitrust laws which may prevent a transaction from being completed. This holds true with the CVS-Aetna deal. Although the DOJ has approved, the States of California, Florida, Hawaii, Mississippi, and Washington have joined the U.S. DOJ Antitrust Division in a civil suit to prevent the transaction on the ground that it would eliminate competition.[3] The states’ ability to regulate and prevent the execution of healthcare transaction make it necessary to complete high-level reviews of all the states laws which may affect the deal.

[1] 15 USC 18, Acquisition by one corporation of stock of another

[2] 15 USC 18, Acquisition by one corporation of stock of another

[3] https://www.justice.gov/opa/press-release/file/1099831/download

Comment (01)

  1. May 4, 2019

    I like the article


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