CVS Urges Judge Not to Halt Integration of Aetna--Update
19 December 2018 - 9:36AM
Dow Jones News
By Brent Kendall
WASHINGTON -- A federal judge on Tuesday softened his previous
suggestion that he would likely issue a court order requiring CVS
Health Corp. to halt its integration of newly acquired insurer
Aetna Inc.
U.S. District Judge Richard Leon in recent weeks has voiced
concerns about the companies' settlement with Justice Department
antitrust enforcers that allowed the nearly $70 billion deal to
proceed.
The judge, who must decide whether to approve the settlement,
earlier this month raised the prospect of requiring CVS to hold
Aetna's assets separately for now, while he considers in more
detail whether the settlement is in the public interest.
During a brief hearing in Washington, D.C., on Tuesday, the
judge took a more conciliatory tone toward CVS, citing with
approval a voluntary offer the company made to keep certain aspects
of Aetna's operations separate for now.
CVS has argued that halting all integration would cause
irreparable harm to the company and its customers. Instead, it
offered four measures it said would help facilitate Judge Leon's
review.
Among them, CVS pledged that Aetna would maintain its historical
control over pricing, and that CVS and Aetna wouldn't exchange
competitively sensitive information for the time being.
Judge Leon said CVS's proposal was constructive and helpful, and
he suggested that an outside monitor be brought in to make sure
that the company lives up to those commitments.
Both CVS and the Justice Department are due to file more court
papers on Thursday.
DOJ approved the deal in October under the condition the
companies sell Aetna's Medicare drug business to preserve
competition. The companies sold those assets to WellCare Health
Plans Inc., and CVS completed the acquisition last month.
Judge Leon has questioned whether the settlement did enough to
protect competition in the health-care industry, citing objections
raised by critics including the American Medical Association.
The Justice Department has said its settlement fully addressed
the potential harms raised by the merger and that Judge Leon didn't
have the authority to object to other parts of the transaction that
the department didn't find problematic.
While the judge had kind words Tuesday for CVS, he said the
department's legal filings were "unhelpful" and "intemperate," and
he urged the government to change its tone.
Judge Leon and Justice Department antitrust lawyers have been at
odds for months; the judge in June rejected the DOJ's challenge to
AT&T Inc.'s acquisition of Time Warner. The department is
appealing that ruling, arguing that Judge Leon's decision ignored
"fundamental principles of economics and common sense."
CVS, for its part, has stressed that it and Aetna are no longer
separate companies. "Our focus is on transforming the consumer
health experience, " a CVS spokesman said. "The actions we've
highlighted for the court make a hold-separate order
unnecessary."
Judge Leon suggested it could take at least several months to
fully review the settlement. CVS said in court that it was happy to
abide by its voluntary commitments for six months, but may want to
reconsider if the case takes longer to resolve.
Beyond Judge Leon's review, integration presents a challenging
task for CVS because of the diverse and sprawling businesses
involved in the Aetna deal. The combined company includes an
insurance operation, a pharmacy-benefit manager and thousands of
retail drugstores.
CVS has said it will trim costs and offer new, integrated
services for consumers, partly by leveraging the huge store of data
it can now assemble.
Clients including major employers, which make decisions about
their health and pharmacy benefits many months in advance, will
already be expecting to hear about the company's offerings for
2019, 2020 and beyond. They will also be closely watching for any
signs of operational problems.
--Anna Wilde Mathews contributed to this article.
Write to Brent Kendall at brent.kendall@wsj.com
(END) Dow Jones Newswires
December 18, 2018 17:21 ET (22:21 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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