The Department of Justice is standing by its decision in support of the merger agreement of CVS health and Aetna, despite getting 147 comments against the deal, including from the American Medical Association.
Of the total 173 comments received, 26 were in support the merger, the DOJ said.
"After careful consideration of the comments, the United States continues to believe that the proposed remedy will address the harm alleged in the complaint and is therefore in the public interest," the DOJ said in a February 13 filing in the U.S. District Court for the District of Columbia.
The DOJ remedy, put in place by CVS and Aetna the day after the $69 billion acquisition closed in November 2018, was to have Aetna divest of its Part D plans.
The remedy preserves competition for the approximately 21 million beneficiaries who buy prescription drug plans, the DOJ said.
WHY THIS MATTERS
Though CVS Health and Aetna sealed the deal late last year, District Court Judge Richard Leon invoked his authority to clear the merger, a move that is usually a procedural step after the DOJ has given its approval.
CVS and Aetna are still waiting on Leon's decision, even as CVS Health CEO Larry Merlo has declared they are one company.
The proposed consent judgements in antitrust cases are subject to a 60-day comment period, after which the court will determine whether the final judgement is in the public interest.
Leon at first ordered the companies to keep their businesses separate and he contemplated appointing a court monitor to make that certain. Instead he agreed to four steps as outlined by CVS and Aetna, including that they file a quarterly declaration certifying compliance.
Leon is within his authority to review antitrust concerns under the Tunney Act and can question the settlement agreement, but he cannot deny the merger outright.
WHAT ELSE YOU NEED TO KNOW
The DOJ received 173 comments about the proposed remedy of the sale of Part D plans, but said many raised questions outside of Tunney Act review.
"Vertical concerns are not addressable under the Tunney Act's standard of review," the DOJ said.
Those voicing concern for the merger included advocacy groups such as the American Medical Association, the American Antitrust Institute, Consumer Action and U.S. PIRG, and the Medical Society of the State of New York.
In addition, the United States received comments from several groups representing pharmacists that compete with CVS, including the National Community Pharmacists Association, the Pharmacists Society of the State of New York, and Pharmacists United for Truth and Transparency, as well as approximately 120 individual pharmacies.
The DOJ said comments included concerns about WellCare's suitability as a divestiture buyer; comments related to the vertical combination of CVS's pharmacy and PBM businesses with Aetna's health insurance businesses; and comments of increased entry barriers in the PBM or health insurance markets, or reduced PBM competition by eliminating Aetna as a competitor.
The AMA said, "Aetna's agreement with WellCare Health Plans, Inc. to temporarily leave the individual PDP marketplace coupled with Aetna's sale of its individual PDP business to an existing competitor (WellCare) does not remedy the anticompetitive effects of this merger in the individual PDP market. Even with this divestiture, the evidence is that the merger of CVS and Aetna causes an increase in market concentration that under the DOJ's own Horizontal Merger Guidelines falls into the category of mergers and acquisitions that 'potentially raise significant competitive concerns and often warrants scrutiny.'"
Twenty-six commenters expressed support for the merger or praised CVS's business standards. These included the California Asian Pacific Chamber of Commerce, Connecticut Business and Industry Association, Atlanta Children's Shelter, SISU Integrated Early Learning, and API Council. Comments addressed the merger's potential to create an innovative platform to improve access to high quality and affordable healthcare.
In particular, the Asian Business Association and the API Council discussed the potential of the merger to allow for more collaboration between doctors, pharmacists, and insurers, resulting in improved patient care, the DOJ said.
In December 2017, CVS entered into an agreement to acquire Aetna in a deal valued at $69 billion. On Oct 10, 2018, the U.S. filed a civil antitrust complaint over concerns of competition in the sale of individual Part D plans in 16 regions. Aetna sold its PDP business nationwide to WellCare.
"Aetna's individual PDP business was the only portion of Aetna's business where the merger with CVS would have caused a substantial lessening of competition," the DOJ said.
"After careful consideration of the public comments, the United States continues to believe that the proposed Final Judgment, as drafted, provides an effective and appropriate remedy for the antitrust violations alleged in the complaint, and is therefore in the public interest. The United States will move this Court to enter the proposed Final Judgment after the comments and this response are published as required …" the DOJ said in the court filing.
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