Aetna headquarters in Hartford
Aetna CEO Mark Bertolini.

Washington – After a federal judge blocked the deal last month, Aetna on Tuesday announced it would no longer pursue a $37 billion merger with Humana.

“While we continue to believe that a combined company would create greater value for health care consumers through improved affordability and quality, the current environment makes it too challenging to continue pursuing the transaction,” said Aetna CEO Mark T. Bertolini. “We are disappointed to take this course of action after 19 months of planning, but both companies need to move forward with their respective strategies in order to continue to meet member expectations.”

U.S. District Judge John Bates ruled last month that a merger of the health insurers would result in a lack of competition in the Medicare Advantage market, resulting in higher premiums and less choice for seniors who choose this alternative to traditional Medicare.

To bolster its argument that the merger would not be anticompetitive, Aetna proposed selling some its Medicare Advantage business to California-based Molina.

In a statement released Tuesday, Aetna said it would pay Humana a breakup fee of $1 billion that was negotiated in its merger agreement and has terminated its agreement with Molina.

Aetna also said it will pay Molina “the applicable fees associated with that termination” but did not disclose the amount of that payment.

The merger attempt had had other costs for Aetna. In recent filings with the Securities and Exchange Commission, the company said it paid about $775 million in legal and financial fees – most of that money spent on defending the merger in court after the Justice Department filed a lawsuit last summer to try to block it.

While Aetna and Humana have abandoned their plans to merge, Anthem filed notice in federal court last week that it intends to appeal the decision of U.S. District Court Judge Amy Berman Jackson that a proposed $54 billion merger with Cigna violated U.S. antitrust laws.

The breakup fee on that merger is $1.85 billion.

Ana has written about politics and policy in Washington, D.C.. for Gannett, Thompson Reuters and UPI. She was a special correspondent for the Miami Herald, and a regular contributor to The New York TImes, Advertising Age and several other publications. She has also worked in broadcast journalism, for CNN and several local NPR stations. She is a graduate of the University of Maryland School of Journalism.

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