Warren to FTC: Closely Scrutinize CVS Health Corp’s Proposed Acquisition of Oak Street Health
“Given the potential risk that vertical integration could lead to higher health care prices and lower quality of care, the Federal Trade Commission (FTC) should carefully scrutinize this deal, and others like it, and oppose any health care acquisition that would threaten competition, increase prices, and reduce quality of care.”
“The acquisition of thousands of independent providers by a few massive health care megaconglomerates could reduce competition on a local or national basis, hurting patients and increasing health care costs.”
Washington, D.C. - United States Senator Elizabeth Warren (D-Mass.) sent a letter to FTC Chair Lina Khan and Commissioners Alvaro Bedoya and Kelly Slaughter urging them to carefully scrutinize CVS Health Corp’s (CVS) pending acquisition of Oak Street Health, Inc (Oak Street). In the letter, the Senator urges the FTC to scrutinize the deal and others like it and oppose any health care acquisition that would threaten competition, increase prices, and reduce the quality of care. She also notes that the FTC should retrospectively review similarly consummated deals and challenge in court any mergers that have reduced competition in violation of antitrust laws. This letter follows a recent memorandum of understanding between the Department of Justice and the Department of Health and Human Services signaling a stronger commitment to antitrust enforcement in the health care industry.
“(T)he acquisition of thousands of independent providers by a few massive health care megaconglomerates could reduce competition on a local or national basis, hurting patients and increasing health care costs. I have fresh concerns in light of CVS Health Corp.’s (CVS) pending acquisition of Oak Street Health, Inc. (Oak Street), the latest example of a major health care company expanding its reach into the primary-care industry,” wrote Senator Warren.
CVS, which also owns the health insurance company Aetna, announced last month that it would purchase Oak Street, a primary care company with 169 centers in 21 states, for $10.6 billion. CVS had already been adding more primary care options to its portfolio with the HealthHUBS and MinuteClinics it offers in many of its stores.
“This recent spate of acquisitions constitutes a major push by health care companies towards vertical integration, creating a few large health care conglomerates that control all aspects of patients’ health care journeys. Health care companies, especially those with health-insurance units like CVS, are betting that controlling providers directly will allow them to cut costs by managing patient care more closely,” continued Senator Warren.
Health care companies boast that these purported cost-savings will ultimately benefit consumers, but examples from other areas in health care demonstrate that vertical integration has had the opposite result: for example, one study found that vertical integration between primary care and hospitals led to higher total spending at the patient level. Another study determined that when a patient is referred for an MRI scan by a vertically integrated referring physician, the price of their scan is 36.5 percent higher, and they pay 31.9 percent higher out-of-pocket costs. And several experts note that vertical integration between PBMs and health insurers has contributed to skyrocketing prescription drug costs.
“Given these serious concerns, it is important that the FTC monitor industry acquisitions closely to ensure that massive, profit-seeking health care conglomerates do not further limit competition and increase health care costs. Section 7 of the Clayton Act prohibits any merger or acquisition that would ‘substantially lessen competition, or tend to create a monopoly,’ and this specifically applies to vertical integration. Accordingly, I ask you to closely scrutinize the acquisition of Oak Street by CVS and other similar acquisitions. I also ask that, using your authority under the FTC and Clayton Acts, you retroactively analyze previous acquisitions of primary and home health care companies by large health insurers and retailers such as United, Humana, WBA, Walmart, and Amazon. If the FTC determines that any of these deals violated antitrust law, I urge you to unravel them,” continued the Senator.
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