On April 28, 2017, the U.S. Court of Appeals for the D.C. Circuit upheld a February 8, 2017 decision by the U.S. District Court for the District of Columbia to block the $54 billion acquisition of Cigna Corp. by Anthem, Inc.. U.S. et al. v. Anthem Inc. et al., case number 17-5024, U.S. Court of Appeals for the District of Columbia Circuit.

In its 2-1 decision, the Court of Appeals concluded that the District Court was correct to halt the deal, “based on Anthem’s failure to show the kind of extraordinary efficiencies necessary to offset the conceded anticompetitive effect of the merger” in 14 states – such effects including “the loss of Cigna, an innovative competitor in a highly concentrated market.” In his dissent, Judge Brett Kavanaugh argued that the Anthem/Cigna combination would benefit the biggest customers, mainly large companies with employees in many states.   In addition, Judge Kavanaugh argued that although the combined companies would require higher payments to manage its accounts, the effect would be offset by the combination’s ability to negotiate lower rates from its providers.

Now that the Court of Appeals has likely doomed Anthem’s attempted acquisition of Cigna, it may be a good time to consider the larger implications and meaning of the demise of the Anthem/Cigna deal, and, lest we forget, the Aetna/Humana deal, another health insurance combination that was called off as a result of a January 23, 2017 D.C. District Court decision holding that, “the merger of Aetna and Humana would be likely to substantially lessen competition in markets for individual Medicare Advantage plans and health insurance sold on the public exchanges” in 364 counties. Sound familiar?

In the coming days, the Sheppard Mullin Healthcare Blog will include further discussion and analysis of the Anthem/Cigna decision and what it may portend for healthcare merger/ acquisition efforts in the future.  What is to be learned from the shared fates of Anthem/Cigna and Aetna/Humana? Are powerhouse healthcare insurance deals going to give way to smaller healthcare insurance combinations in the future? Have the Anthem/Cigna and Aetna/Humana decisions shed any light on the antitrust analysis that will be applied to future combinations in the healthcare space? How does the fate of the ACA impact the healthcare antitrust opinions of tomorrow?