Cigna-Express Scripts merger gets federal government approval

Federal officials Monday gave the go-ahead to the proposed merger between Cigna, one of the nation’s largest health insurers, and Express Scripts, a major pharmacy benefit manager.

The $52 billion deal, announced in March, is one of two proposed transactions involving pharmacy companies before the Justice Department. In December, Aetna, another giant insurer, announced its plan to join forces with CVS Health, the drugstore chain that is the main independent rival to Express Scripts, in a $69 billion deal.

The Justice Department continues to review the deal between Aetna and CVS, although the companies are also expected to receive a green light soon.

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These combinations of powerful health insurance companies with the country’s dominant pharmacy benefit managers are occurring as established players in the health care sector are frantically searching for ways to fend off potential interlopers like Amazon, whose tentative forays into the pharmacy business has already shaken up the industry.

The deals also represent a recognition by established companies that they need to change their business model in response to customer demands that they better control prices. Both insurers and pharmacy benefit managers serve as middlemen for employers and governments, and the proposed mergers are an attempt to convince their customers that they are working to reduce costs.

The decision by federal antitrust officials to allow Cigna to buy Express Scripts signals an acceptance of so-called vertical mergers in which companies, although in the same broad line of business, do not directly compete. The nation’s big health insurers, including Aetna and Cigna, had previously attempted to combine with other insurers, only to have those deals blocked.

Reed Abelson is a New York Times writer.