Appeals court upholds decision to block Anthem bid for Cigna

Court denies Anthem's appeal of antitrust ruling against proposed Cigna merger

Court denies Anthem's appeal of antitrust ruling against proposed Cigna merger

A federal appeals court on Friday affirmed a lower court's decision to block a merger of two of the largest health insurers in the country, Anthem and Cigna. 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. The Justice Department had sued to stop the $48 billion merger, which would combine two of the biggest health insurers in the U.S. The agency also blocked Aetna Inc.'s planned merger with Humana Inc. In September 2015, soon after the merger was proposed, the AMA released Competition in Health Insurance, an annual analysis of insurance markets that showed almost half of all states could see diminished competition in local health insurance markets if the Anthem-Cigna and Aetna-Humana mega-mergers were allowed to proceed.

Anthem's efforts to buy Cigna were dealt a potentially fatal blow Friday despite the health insurance giant's deep connections to the White House.

For its part, Anthem argued that due to the medical savings gleaned from the merger would neutralize competition, according to Bloomberg.

If the deal is terminated, Cigna believes it has a right to a $1.85 billion break up fee and significant damages.

Last month, Anthem told the appeals court that the February decision blocking the deal was wrong because it rejected the lower medical costs the merger would provide to companies. (NYSE:CI) The federal appeals panel in Washington upheld the lower court's ruling by a 2-1 vote.

The Justice Department, now under President Donald Trump, also said that it was pleased by the decision. It also asked for a statement that Cigna had lawfully terminated the deal.

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"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".

"Anthem has not explained why these projected savings would even exist", Judge Judith Rogers wrote in the opinion.

Circuit Court Judge Brett Kavanaugh dissented saying cost savings would be passed on to consumers.

"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", said AMA President Andrew W. Gurman, M.D.

The ruling from the U.S. Court of Appeals for the District of Columbia Circuit likely dooms an acquisition bid that has lasted almost two years.

Anthem has not yet returned Healthcare Dive's request for comment.

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