The state Department of Financial Services approved CVS Health's $69 billion acquisition of insurer Aetna on Monday morning, lifting the final barrier to the deal's closure.
Aetna said in a Securities and Exchange Commission filing the companies expect the deal to close on Wednesday.
The U.S. Department of Justice approved the purchase in October and the companies have already received all other necessary approvals from other states. Bloomberg News reported that 28 states, including New York, weighed in on the combination of the nation's largest drugstore chain and one of the nation's largest health insurers.
DFS said it received commitments that the costs of CVS' acquisition will not be passed on to Aetna customers in New York in the form of higher premiums. CVS also agreed to provide $40 million to the state to support health insurance education and enrollment, including payments to the state's Health Care Transformation Fund. That fund has been used previously by the Cuomo administration to support struggling hospitals.
"DFS listened to the concerns of the public and has obtained significant commitments from CVS and Aetna to address those concerns, ensuring that the companies hold to their promises of reduced costs and improved health care for New Yorkers," DFS Superintendent Maria Vullo said in a statement.
The department held a public hearing on Oct. 18 with local trade groups representing pharmacists and physicians who opposed the transaction. CVS Caremark is one of the three biggest pharmacy benefit managers, which negotiate drug prices on behalf of insurers, employers and union benefit funds. Opponents said the deal would limit competition.
CVS and Aetna have said their combination will lead to lower costs for consumers and greater access to care through a network of health clinics at CVS stores. The chain and its subsidiaries own 573 pharmacies in the state. Aetna received about $3.5 billion in premiums from New York customers last year, according to DFS.
To win approval from New York, CVS also agreed not to offer any preferential pricing to Aetna-affiliated insurers in the state and to continue to include non-chain pharmacies in its local networks for at least three years.
The health plan will maintain its current set of insurance products for three years, add an additional product in the small- or large-group market and document the "synergies" it said it would create by combining with CVS.
The Cuomo administration has previously supported legislation that would require that pharmacy benefit managers, including CVS Caremark, are licensed and regulated by the Department of Financial Services. A previous bill was not ultimately approved by the state Legislature but DFS said Monday that CVS Health has agreed to "take no action to oppose such future legislation."
Dr. Thomas Madejski, president of the Medical Society of the State of New York, said he supported the Cuomo administration’s push for legislation to more closely monitor pharmacy benefit managers. He said the "enormous power" of the combined company would marginalize physicians.
"Physicians fully expect that the merger will further reduce competition in New York’s health insurance market," he said in a statement. "This is one more reason why physicians deserve the right to collectively."
CRAIN'S NEW YORK BUSINESS