Appeals court upholds decision to block Anthem bid for Cigna

Appeals court upholds decision to block Anthem bid for Cigna

Appeals court upholds decision to block Anthem bid for Cigna

A United States federal appeals court yesterday upheld a lower court's decision to block health insurance provider Anthem Inc's $54.2-billion merger deal with peer Cigna Corp on the ground that the transaction would lead to higher prices for healthcare.

As previously reported by Healthcare Informatics Managing Editor Rajiv Leventhal, on February 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.

Consumer groups and medical organizations also objected to the merger, which would have resulted in the country's largest health insurer. A federal appeals court on Friday, April 28, 2017, left in place a decision blocking Blue Cross-Blue Shield insurer Anthem's bid to buy rival Cigna, saying that a bigger company is not better for consumers.

A year later, however, the Department of Justice and 14 several states filed suit to block the deal, arguing that the merger would "fundamentally reshape the health insurance industry", reduce health care access, competition, and options for tens of millions of Americans.

Cigna's shares during mid-day trading were down about one percent to $154.97.

In July past year, Anthem struck a friendly deal to acquire Cigna in a bid to create the largest health-insurance company in the US. On November 21, 2016, the plaintiffs proceeded to trial against Anthem and Cigna before U.S. District Court Judge Amy Berman Jackson of the D.C. District Court. Anthem faults Cigna Chief Executive Officer David Cordani, claiming he sabotaged the deal.

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However, the court - along with the Department of Justice and several states that sued to prevent the merger - point out that medical cost savings claims were "not verified, not specific to the merger, and not even real efficiencies".

The federal appeals court in Washington upheld a lower court ruling by a 2-1 vote, according to an order issued Friday.

A DE 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.

"The problem for this merger, if there is one, is in its effects in the upstream market - namely, in its effects on hospitals and doctors as a result of Anthem-Cigna's enhanced negotiating power".

"The crux of Anthem's argument regarding merger specificity is the theory that the combined company will allow Anthem to create a "new product" that is "unavailable on the market today", the majority said".

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