CVS-Aetna judge to hear testimony from AMA, other critics next month

• D.C. District Court Judge Richard Leon said last week he will allow witnesses to testify as part of his review of the CVS acquisition of Aetna and the settlement the two reached with the U.S. Department of Justice. Witnesses will likely include the American Medical Association, which has blasted the deal.
• Leon has yet to sign off on the nearly $70 billion deal and has been critical of the agreement the two struck with the DOJ, previously saying it addresses only “about one-tenth of 1%” of the megamerger.
• The hearing is scheduled for May, according to The Wall Street Journal.

At issue is the deal DOJ struck with CVS and Aetna to allow the union to proceed. The two agreed to shed all of Aetna’s Medicare Part D business to WellCare (itself recently acquired by rival Centene), a critical component to clearing antitrust hurdles.

However, some like AMA have voiced concern about the settlement agreement. Leon, who is tasked with reviewing the deal under the Tunney Act, has shared his skepticism about whether it does enough to protect consumers from anticompetitive effects.

CVS told Healthcare Dive the company had no comment in response to Friday’s courtroom news.

AMA told Healthcare Dive: “Given the detrimental consequences of the merger, the AMA appreciates the detailed consideration that U.S. District Judge Richard Leon is giving to the proposed settlement.”

Despite the drawn out review, CVS and Aetna have already closed the deal and CVS CEO Larry Merlo sought to assure investors in January, calling the company already “one.” In February, CVS reported its first quarterly results including operations of Aetna.

During last week’s hearing, DOJ Attorney Jay Owen argued against a future hearing that would include expert witnesses of AMA’s choosing. Owen said it would add inconvenience and cost to the process “with little prospect of providing additional information to aid the Court’s public interest determination.”

Owen attempted to remind the judge of the limited scope before him under the Tunney Act: whether the remedy adequately addresses the original complaint brought by the DOJ. In this case, whether Aetna’s divestiture of its Medicare Part D business to WellCare resolves anticompetitive effects.

The fear is that the witnesses AMA calls will attempt to talk about issues outside of the judge’s scope, in particular those of vertical integration.

Leon countered: “It should be pretty simple for you, then, because then you can call three people or two … who would simply indicate that, ‘The testimony that you’ve just heard, Your Honor, is for whatever — the following reasons irrelevant and is not worthy of your consideration.'”

https://www.healthcaredive.com/news/cvs-aetna-judge-to-hear-testimony-from-critics-next-month/552173/