By Josh Kosman June 10, 2019 | 9:57pm
A federal judge appears to be nearing a
surprise move to block CVS’ $69 billion acquisition of Aetna, according to
sources close to the health-industry giants.
US District Richard Leon — who warned lawyers
at a little-noticed hearing last week that they may want to cancel their summer
vacation plans — looks like he is setting the stage to reject the
mega-merger on concerns that it could raise prices and kill choices for consumers,
sources told The Post.
At last week’s hearings, Judge Leon appeared
to take digs at the Department of Justice for its weak policing of the deal.
Arguing that the addition of 21 million Aetna customers could uncomfortably
strengthen CVS’s pharmacy-benefits management business, Leon asked, “Did
Justice evaluate that issue?”
After a CVS witness said he thought DOJ had
and the findings were confidential, Judge Leon said, “If they did it in
writing, the Court sure as heck should have it,” according to a court
transcript.
After sparring with lawyers and witnesses for
two days over the deal’s expected impact on competition in health care, Judge
Leon scheduled oral arguments for July 17 and is expected to rule soon after
that.
“I think Leon rules against us,” a source
working with CVS and Aetna said, speaking on the condition of anonymity. “If he
rejects the settlement, we would have to figure out the next steps.”
A rejection by Judge Leon would likely set the
stage for an appeal by DOJ, which has recommended that the deal be approved.
Failing that, the DOJ could theoretically
present a new settlement, although experts say that could be difficult, as the
deal’s current concession to sell Aetna’s Medicare Part D individual prescription drug
plans to WellCare Health Plans addresses the only significant
overlap between the businesses.
Indeed, it is specifically this remedy that
Judge Leon has the power to reject, effectively scuttling the deal or at least
forcing a major rejiggering, according to experts.
It’s a decidedly different scenario from what
CVS and Aetna were expecting last fall, before a Nov. 29 hearing in which Judge
Leon stunned lawyers for the companies and the Justice Department alike by
announcing that he would not “rubber stamp” the deal.
At the time, the companies had already set the
merger in motion, including the sale of Aetna’s Medicare Part D unit.
Judge Leon could be the first to reject a
merger settlement since 1974, when the Tunney Act was passed by Congress,
giving judges the power to disapprove settlements, said Seth Bloom, who as a
member of the US Senate Judiciary Committee helped in 2004 to revise the law to
make it easier for judges to act.
“The fundamental weakness in the Tunney Act is
it does not require the merging parties to wait for judicial approval to
consummate their deal,” Bloom said. Still, “it allows a judge to hold hearings
and to take a closer look at a merger.”
“CVS Health and Aetna have been one company
since the deal closed in November 2018, and the combined entity is already
showing progress toward its goal of transforming the consumer health
experience,” CVS said. “We won’t be distracted by unfounded rumors and
speculation.”
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