According to a report from Bloomberg posted today, Anthem Inc. lost its bid to overturn a court ruling that blocked its planned merger with Cigna Corp.
As previously reported by Healthcare Informatics Managing Editor Rajiv Leventhal, on Feb. 8, a federal judge, Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia, issued a ruling blocking the Anthem-Cigna merger.
The potential $54 billion deal to merge major health insurers Anthem and Cigna would have represented the largest health insurance transaction in the U.S. That Feb. 8 decision came just a few weeks after U.S. District Judge John D. Bates in Washington blocked the $37 billion Aetna-Humana merger.
In this latest development, according to Bloomberg reporters David McLaughlin and Andrew Harris in an article posted today, the U.S. Court of Appeals for the District of Columbia upheld the lower court ruling by a 2-1 vote, according to an order issued Friday.
According to the Bloomberg article, the panel wrote, “We hold that the district court did not abuse its discretion in enjoining the merger based on Anthem’s failure to show the kind of extraordinary efficiencies necessary to offset the conceded anticompetitive effect of the merger.”
The lower court judge ruled said the deal should be stopped because it risked undermining competition in the health insurance markets.
According to the report by Bloomberg, the two companies, Anthem and Cigna, have since sued one another, with Cigna seeking $1.85 billion breakup fee and Anthem blaming its rival for undermining their legal defense of the deal.
“A Delaware judge has barred Cigna from walking away from the merger pending the results of a May 8 hearing at which Anthem will ask the court to extend that order through the end of litigation there. Rejection of that request would effectively set Cigna free,” McLaughlin and Harris wrote.
The American Medical Association (AMA) issued a statement applauding the appeals court ruling. The AMA submitted an amicus brief to the appellate court in support of preserving the merger injunction issued in February. AMA argued that the merger “would harm patients because it would likely lead to higher premiums, eliminate the existing head-to-head competition between Anthem and Cigna, reduce the number of national carriers from four to three, and diminish innovation.” AMA further stated, “Unchallenged by today’s Court of Appeals ruling, these findings validate AMA’s ongoing concerns with highly concentrated health insurance markets.”
“The appellate court sent a clear message to the health insurance industry: a merger that smothers competition and choice, raises premiums and reduces quality and innovation is inherently harmful to patients and physicians,” AMA President Andrew W. Gurman, M.D., said in a prepared statement. “The result of 21 months of advocacy before the U.S. Department of Justice (DOJ), congressional leaders, state attorneys general, insurance commissioners, and federal court, this outcome shows again that when doctors join together, the best outcome for patients and doctors can be achieved.”
AMA further stated, “Barring an appeal to the U.S. Supreme Court, today’s decision concludes a successful campaign by the AMA and 17 state medical societies – on behalf of patients and physicians – to stop the Anthem-Cigna merger.”