PROVIDENCE, R.I. (WPRI) – Democratic Congressman David Cicilline has been sounding off lately regarding his growing concern about big corporations getting even bigger. But he sounds less worried about the mega-merger now being proposed in his own district.
That became clear Tuesday when the U.S. House Judiciary Committee’s Subcommittee on Regulatory Reform, Commercial and Antitrust Law – where Cicilline is the top Democrat – held a hearing to examine drugstore giant CVS Health’s blockbuster $69-billion deal to buy insurer Aetna. The topic: “Competition in the Pharmaceutical Supply Chain.”
CVS is Rhode Island’s biggest for-profit employer and is headquartered in Woonsocket, on the northern edge of the 1st Congressional District that Cicilline has represented since 2011. At the hearing, Cicilline described the company as “an incredible corporate citizen” as he introduced testimony from Thomas Moriarty, a top CVS executive.
“Our country faces tremendous challenges in creating an equitable and affordable health care system, but CVS Health has helped countless Rhode Islanders and people across the nation better manage their health and improve access to affordable prescription drugs,” Cicilline, a Democrat, said.
On the CVS-Aetna merger specifically, Cicilline acknowledged worries about “waves of consolidation in health care markets.” But he contrasted the proposed deal positively with Aetna’s failed prior effort to join forces with fellow insurer Humana, which a judge blocked. (Aetna is based in Hartford.)
“There appear to be significant differences between CVS Health’s proposed acquisition of Aetna and prior attempted mergers that would have contributed to the collapse of competition in health insurance markets,” Cicilline said. He thanked CVS officials for giving “really important information and data to me on this proposed transaction.”
During the hearing Cicilline also defended CVS’s business model, which includes both retail drugstores and pharmacy-benefit manager (PBM) services.
“I believe that it is critical that consumers ultimately receive the benefit of lower drug prices,” he said. “But make no mistake – simply demonizing or scapegoating PBMs and retail pharmacies in the drug supply chain is a distraction from the leading causes of high-drug prices.”
Cicilline’s relatively positive view of the CVS deal stands in contrast with comments he’s made in recent months criticizing the proposed acquisitions of 21st Century Fox by Disney, Whole Foods by Amazon or Tribune by WJAR-TV owner Sinclair Broadcasting. He also gave a major speech in December to the Open Markets Institute laying out his concerns over antitrust.
“We are in a monopoly moment,” Cicilline said in the speech. “Nearly every relevant point of economic data shows that the concentration of economic power is at historic levels. … We must aggressively fight anticompetitive transactions that allow incumbent industries to perpetuate their stranglehold over commerce through acquisition after acquisition of future competitors.”
In his own testimony, CVS’s Moriarty insisted its takeover of Aetna will cut costs. “This transaction is about bringing together two complementary businesses to create an innovative new health care platform that is easier to use, less expensive for consumers and that partners with local health care providers to deliver superior, coordinated care,” he said.
Not all Democrats share Cicilline’s openness to the CVS-Aetna merger. U.S. Sen. Elizabeth Warren, a Massachusetts Democrat and another outspoken lawmaker on antitrust issues, said when the proposal was announced that it made her “very concerned,” warning it could drive up prices for consumers.
Observers thought Tuesday’s hearing went smoothly for CVS and Aetna. Politico, the Capitol Hill news outlet, opined Wednesday that the two companies had “faced few tough questions” from lawmakers on the committee.