Not so fast: Judge delays CVS-Aetna closure, instructs companies to remain separate

Samantha Liss

Dec. 4, 2018

Dive Brief:

• Judge Richard Leon of the District Court of D.C. has yet to sign off on the agreement reached between antitrust regulators and CVS and Aetna over their nearly $70 billion merger, causing a stumbling block for the deal. It's unclear how this could affect the agreement with the Justice Department.
• To clear antitrust hurdles, Aetna sold its Medicare Part D business to a WellCare subsidiary. But the judge seemed to take issue with this aspect of the deal. "I am concerned that your complaint raises anti-competitive concerns about one-tenth of one percent of this $69 billion deal," Leon said during a hearing Monday hearing, according to a transcript of the court proceedings. 
• Leon said he now has to decide whether the DOJ drafted the complaint "so narrowly as to effectively foreclose my role under the Tunney Act," according to the transcript. 

Dive Insight:

Just last week, CVS and Aetna announced the closing of their megamerger, but a federal judge is now effectively saying not so fast. Leon said Monday the two should keep their companies separate until he can enter a final judgment on the case. 

Chris Garmon, a former economist for the FTC for nearly two decades, told Healthcare Dive called the move potentially unprecedented.

"I can't recall anything like that occurring with a consent that was agreed to," Garmon said. If the judge takes issue with a particular aspect of the deal, it may force the entities back to the negotiating table, he speculated.

Earlier this year, DOJ said it would not seek to block the deal so long as the combined entities agreed to certain conditions such as selling the Medicare Part D business, an area of competition between the two companies. 

DOJ previously said that without the settlement, the merger would "cause anticompetitive effects, including increased prices, inferior customer service, and decreased innovation in sixteen Medicare Part D regions covering twenty-two states."

The sale of the Medicare Part D alleviated those concerns. But a judge needs to sign off on the agreement between the combined entity and the DOJ.

The next hearing is Dec. 18.

https://www.healthcaredive.com/news/not-so-fast-judge-delays-cvs-aetna-closure-instructs-companies-to-remain/543550/