A merger “O.K.” with a slight delay

Not to be outdone by the Cigna-Express Scripts merger, CVS Health and Aetna’s proposed merger has been approved by the US Justice Department. The $69B (nice) deal combines Aetna’s insurance skills with CVS’s drug benefits management and nearly 10,000 pharmacy locations to create a healthcare behemoth. The deal will allow Aetna customers to seek less expensive medical services at those pharmacy locations, including CVS’s 1,000+ walk-in clinics which have served 25M patients since 2000.  To get the deal approved, Aetna had to sell all its standalone Medicare Part D plans. Otherwise, the merged company would have owned 30 percent of those drug plans—an unacceptable share to the DOJ. We’ll be interested to see how the new company competes with the similarly structured Cigna-Express Scripts in the coming years.

A merger “O.K.” with little delay

Cigna and Express Scripts have received their parents’ the Justice Department’s blessing to go ahead with their wedding merger. The health insurer and pharmacy benefit manager say they’re a good fit for each other since they’ll be able to share information about their customers’ medical expenses that will help them manage patient health better. But the announcement has got to sting a bit for CVS Health and Aetna, who have been waiting on DOJ approval for their merger since before the Cigna-Express Scripts deal was announced. Visual/meme representation of that here. You’ve gotta think that Amazon’s ever-threatening encroachment into the healthcare industry is driving some of these vertical mergers between health insurers and PBMs.

Black markets, drugs, and terrorists

While it may sound like the plot for the latest Mission Impossible film, we assure you it’s real life. Five companies—AstraZeneca, General Electric, Johnson & Johnson, Pfizer, and Roche—are under investigation by the US Department of Justice for their alleged involvement in an Iraqi corruption scandal. The investigation follows a lawsuit filed on behalf of American service members which alleges these companies sold and donated medical supplies to the (then) corrupt head of the Iraqi Ministry of Health, who then sold these supplies to fund terrorist militias. Obviously, the companies are denying their involvement in the unsavory terrorist aspect of this story, and the defendant’s filing in the lawsuit points out that the US government encouraged these sales and donations at the time. This action thriller writes itself…

Baysanto? Monsantayer?

Whatever they end up calling themselves, Bayer and Monsanto have finally crossed the last big regulatory hurdle in the way of their proposed merger. The US Department of Justice gave Bayer permission to go through with the $62.5B deal on Tuesday. It’s one of the largest mergers on record (list of those here), and the new company will have control of over 25% of the world’s seeds and pesticides. Get ready for a future where Mbayto branded trees litter the landscape. The companies claim that the merger will allow them to increase spending on R&D, but Business Insider reports that they’ll only really be spending about $500M more than when they were separate. With that much of the market cornered there’s probably a better reason the deal will benefit the companies…

5. Price-fixing faux pas

After a two-year investigation, the U.S. Justice Department has dropped the hammer on two former pharmaceutical executives of Heritage Pharmaceuticals. According to Bloomberg, former President Jason Malek and ex-CEO Jeffrey Glazer have been charged with colluding with other pharma companies to raise the prices on generic drugs. The two are preparing to plead guilty and plan on working with prosecutors examining allegations of widespread collusion across manufacturers. A dozen other companies are being investigated with subpoenas already sent to Teva and Mylan. Batten down the hatches as more charges against drug-makers could spring up.

1. Abandon generic ship

Off-setting the post-election market bump is some downside for pharmaceuticals, specifically generics manufacturers. DOJ recently expanded its price fixing probe to investigate more than a dozen generic drug makers, with potential charges in tow. Cue textbook reaction to uncertainty in the markets: Shares plummet. Mega-manufacturer Teva felt it especially hard, with stocks taking a dip of more than 9%. Other big players like Mylan, Endo, and Impax also took solid hits. The reaction may not be entirely unwarranted considering the almost-simultaneous price jumps for several drugs across several manufacturers. The heart medication, Digoxin, recently saw an all-around sevenfold price hike, while the cost of antibiotic doxycycline increased by 121% within a few months. Looks like DOJ has some questions and investors aren’t waiting around for the answers.