The DOJhas decided that the deal won't significantly reduce competition inthe market for the services provided by pharmacy-benefits managersor raise costs for Cigna's rivals. (Photo: AP)

Antitrust enforcers signed off on Cigna Corp.'s $54 billion takeover of pharmacy-benefitmanager Express Scripts Holding Co., clearing one of two health-care deals that stand to reshape theindustry.

Approval by the Justice Department smooths the way for the dealto wrap up by the end of the year, the companies said Monday in ajoint statement. While some state regulators have yet to sign off,the U.S. review was one of the last major steps for the agreement thecompanies struck in March.

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Express Scripts shares rose 3.7 percent to $95.23 at the closein New York. Cigna was up 1.4 percent to $197.84.

Insurers, pharmacy-benefit managers and others in thehealth-care supply chain have been making deals to streamlineexpenses and gain scale in an industry threatened by rising costsfor medical services and new competition from the technologysector.

The Justice Department said it cleared the deal following asix-month investigation. The deal won't significantly reducecompetition in the market for the services provided bypharmacy-benefits managers or raise costs for Cigna's rivals, thedepartment said in a statement.

Cigna's deal for Express Scripts came on the heels of CVS HealthCorp.'s about $68 billion deal to buy insurer Aetna Inc., which isstill under review. That combination would unite the U.S. drugstoregiant with the third-biggest health insurer. CVS also managesdrug-benefits plans for employers and insurers, a business thatcould help steer Aetna's customers into CVS drugstores when theyfill a prescription.

While a combined Cigna-Express Scripts would have substantialbargaining power over drug prices, it remains to be seen whetherthat muscle would reduce costs for the employers and patients whoultimately pay the bill.

Ana Gupte, an analyst at Leerink Partners, said approval of theExpress Scripts deal is a positive sign for CVS and Aetna. That'sbecause it indicates that the Justice Department likely isn'tconcerned about consolidation among insurers and pharmacy-benefitmanagers, which aren't direct competitors.

Bloomberg reported earlier this month that CVS and Aetna are intalks with the Justice Department about divesting Medicareprescription-drug plans to resolve the government's concerns thedeal would harm competition.

The Justice Department didn't put any conditions on theCigna-Express Scripts deal, the companies said in a jointstatement.

“We are pleased that the Department of Justice has cleared ourtransaction and that we are another step closer to completing ourmerger and delivering greater affordability, choice andpredictability to our customers and clients as a combined company,”Cigna's Chief Executive Officer David Cordani said in astatement.

What does the Cinga-Express Scripts deal mean forbrokers and benefits managers? Read more:

• Is consolidation in health care good foremployers?
• Innovation, consolidation and the future ofbrokers
• Cigna and Express Scripts: 4 thoughts forbrokers

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