Arguments against the merger were insufficient to undermine the settlement agreement reached by the Department of Justice, judge says.
After two months of deliberation, District Court Judge Richard Leon has sided with CVS Health and Aetna on the settlement agreement allowing them to merge.
Arguments against the merger were not sufficient enough to undermine the settlement agreement reached by the Department of Justice, Leon said in his ruling handed up today.
Although opponents listed as amici, or friends of the court, raised substantial concerns, CVS and federal government witnesses, combined with the existing record, persuasively support why the markets at issue are not only very competitive today but are likely to remain so post-merger, Leon said.
“Consequently, the harms to the public interest the amici raised were not sufficiently established to undermine the government’s conclusion to the contrary,” Leon wrote in his ruling. “As such, for all of the above reasons, I have concluded that the proposed settlement is well within the reaches of the public interest and the government’s motion to enter the proposed final judgment should therefore be granted.”
CVS said after the decision, “CVS Health and Aetna have been one company since November 2018, and today’s action by the district court makes that 100 percent clear. We remain focused on transforming the consumer healthcare experience in America.”
However, the American Medical Association, which was against the merger, said the decision will ultimately fail patients, raise prices, lower quality and reduce choice.
“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 and Medicare Part D stand-alone prescription drug plan insurer,” said AMA President Dr. Patrice A. Harris by statement. “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.”
WHY THIS MATTERS
CVS Health and Aetna closed their $69 billion deal in November 2018, but the final signature on the deal has been awaiting the approval of Leon, who exercised his right through the Tunney Act to review the settlement agreement in the case.
The settlement agreement issued by the Department of Justice stipulated that Aetna sell its Part D plans to satisfy anti-competitive concerns. Aetna sold the business to WellCare.
Leon has been weighing the case since hearing final arguments in July.
THE LARGER TREND
Mergers have become a part of the healthcare landscape. Stakeholders and others have been watching the outcome of this case as a potential predictor of how competitive concerns will be handled.
CVS must compete vigorously to retain its pharmacy benefit manager customers, Leon said.
“In the final analysis, PDP customers do have numerous options when picking a plan, and many of the plans are offered by major healthcare players, including United Healthcare, Humana, Cigna, and Rite Aid,” Leon said. “The moderate concentration in the PDP market has neither prevented WellCare from competing in the market nor prevented price competition from driving premium prices down in recent years.”
ON THE RECORD
“The merger combines two healthcare giants. Its effects, for better or worse, will be felt by millions of consumers,” Leon said in the ruling.
“In the final analysis,” he said, “the court’s function is not to determine whether the resulting array of rights and liabilities is the one that will best serve society, but only to confirm that the resulting settlement is within the reaches of the public interest.”