A federal judge indicated Friday he will look at whether the $70 billion CVS-Aetna merger threatens additional harm to consumers that the government didn’t identify in its own investigation of the deal.
U.S. District Judge Richard Leon appeared open to considering merger opponents’ demands for greater concessions out of CVS, although he didn’t signal a strong preference.
Friday’s arguments marked the last in Judge Leon’s monthslong scrutiny of the Justice Department’s settlement with CVS-Aetna. He wrapped up with few hints on how he will rule, only promising that he will render a decision soon.
The judge signaled he may look at the merger’s potential impacts overall rather than limiting his decision to the Justice Department’s settlement that had Aetna sell off its Medicare Part D business to rival insurer WellCare.
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He blasted the Justice Department’s counsel for doubling down on the argument that the court’s review must be limited to the divestiture of Aetna’s Medicare Part D business, which was the only aspect of the deal the government identified as potentially anticompetitive.
Leon clarified with Justice Department attorney Jay Owen the government’s position that even if the judge identified additional public harm, those harms wouldn’t undermine the public interest. When Owen agreed, the judge issued a sharp rebuke.
“Are you familiar with the first law of holes?” Leon said. “If you find yourself in a hole, stop digging.”
The Los Angeles-based AIDS Healthcare Foundation asked Leon to require some strict market concessions from CVS beyond the Aetna Part D divestiture. The organization runs its own robust network of pharmacies.
The group’s attorney, Christopher Casey, pointed to Georgia, where the state insurance department secured significant changes to the terms of the CVS-Aetna deal before signing off.
Casey urged Judge Leon to require similar concessions, including that CVS must invite non-CVS pharmacies, physicians, clinics and other providers into its networks, ensure that no managed-care company gets denied access to the CVS Caremark pharmacy benefit manager, and guarantee that all Aetna customers can opt out of the CVS plans.
CVS counsel Enu Mainigi rejected the demands of the AIDS Healthcare Foundation and the American Medical Association — whose lawyer asked Leon to reject the Justice Department settlement outright — as claims by competitors.
Judge Leon followed up with Owen about the AIDS Healthcare Foundation’s demands, asking whether he had a problem with those proposed remedies. Owen argued they aren’t necessary.
Owen also told the judge that the government hasn’t taken a position on whether those proposed remedies would be useful.
Judge Leon acknowledged the unprecedented nature of his long probe into the deal. By law, a court has the final say over any government approval of a merger, but the process is usually treated as a formality.
He pointed out to the court that the issues he is considering about the merger “are not simple, and are of great consequence to millions.”
Date: July 25, 2019
Source: Modern Healthcare