The megamerger passes a federal judge’s scrutiny.
A federal judge reviewing a Justice Department decision to allow CVS Health to merge with the health insurer Aetna said on September 4 that the agreement was legal under antitrust law, Reuters reports.
U.S. District Judge Richard J. Leon had been reviewing a government plan, announced in October, to allow the merger on the condition that Aetna sell its Medicare prescription drug plan business to WellCare Health Plans. Both deals have already been closed.
Leon had initially balked at approving the merger conditions and insisted on hearing from critics of the deal, but finally decided to grant the motion to approve the consent agreement. But he took aim at the common practice of companies’ closing multibillion-dollar deals while the court review, required by the Tunney Act, was still in progress.
In his ruling, the judge said that the court must determine what is in the public’s interest. “That determination in this particular case, however, is no small matter,” he wrote. “Industry players, consumer groups, and state regulatory bodies have all raised concerns about CVS’s acquisition of Aetna. The merger combines two healthcare giants. Its effects, for better or worse, will be felt by millions of consumers.
“If the Tunney Act is to mean anything,” Leon continued, “it surely must mean that no court should rubber-stamp a consent decree approving the merger of ‘one of the largest companies in the United States’ and ‘the nation’s third largest health insurance company,’ simply because the government requests it.”
In December, the judge said he was “less convinced” than the government that the asset sale to WellCare would resolve antitrust concerns. Since then, Centene had agreed to acquire WellCare for $15.27 billion.
According to a statement by CVS spokesman T.J. Crawford, “CVS Health and Aetna have been one company since November 2018, and (the) action by the District Court makes that 100% clear. We remain focused on transforming the consumer healthcare experience in America.”
Critics of the CVS-Aetna deal included the American Medical Association (AMA) and the AIDS Healthcare Foundation.
Patrice A. Harris, MD, MA, president of the AMA, said in a statement, “Despite an unprecedented review that dragged many details of this merger into the light, (the) decision ultimately fails patients, will likely raise prices, lower quality, reduce choice, and stifle innovation. The American people and our health system will not be served well by allowing a merger that combines health insurance giant Aetna Inc. with CVS Health Corporation––the nation’s largest retail pharmacy chain, specialty pharmacy, pharmacy benefit management (PBM) and Medicare Part D Stand-Alone Prescription Drug Plan (PDP) insurer.
“For patients and employers struggling with recurrent increases to health insurance premiums, out-of-pocket costs, and prescription drug prices, it's hard to find any upside to a merger that leaves them with fewer choices. Nothing in the deal guarantees reductions on insurance premiums or prescription drug costs. As for promised efficiency savings, that money will likely go straight to CVS’s bottom line. CVS made no commitment to pass much-hyped savings onto consumers through lower premiums or drug costs.
“Although this outcome is not what we fought for, the AMA is optimistic that this case and the thorough examination of its underlying facts are a sign of things to come. When the public interest is harmed by healthcare mergers, courts charged with scrutinizing DOJ merger settlements must not be a rubber stamp.”