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Judge rules against CVS/Aetna in allowing witness testimony over merger agreement

Testimony is expected to center on the impact of the merger on pharmacy benefit management markets, judge says.

Susan Morse, Senior Editor

U.S. District Judge Richard Leon has ruled against CVS Health's motion to exclude, and the federal government's motion to limit, the scope of witness testimony in the the antitrust hearing of the $69 billion merger between CVS Health and Aetna.

Judge Leon sided with the American Medical Association's request to allow the testimony of three healthcare and antitrust witnesses, and against CVS and the Department of Justice in their motion to exclude or limit testimony they said was outside the scope of review.

Three days are being set aside for the hearing in United States District Court in Washington, D.C. It will start at 10:30 a.m. on Tuesday, June 4 and finish no later than 5:30 p.m. on Thursday, June 6, Leon said in the ruling handed up late Monday.

IMPACT

The ruling means there will be a full airing of the arguments for and against the DOJ's merger settlement agreement, through three witnesses for each side.

Because this is not a trial, the witnesses will not be subject to cross examination and there will be no opening or closing arguments.

The three amici witnesses who are expected to speak against the merger are Dr. Neeraj Sood; Dr. Diana L. Moss; and Dr. Michael B. Wohlfeiler.

The three witnesses for the Department of Justice and CVS/Aetna are Dr. Alan Lotvin, Terri Swanson and Dr. Lawrence Wu.

Leon makes clear in the ruling that pharmacy benefit management markets will be at the forefront of discussion.

The judge sided with those who argued that an assessment of the effect of the settlement agreement on the public must take into account the DOJ's divestiture remedy and PBM markets.

"And to say the least, an understanding of how participants in markets for individual prescription drug plans are affected by markets for pharmacy benefit management services would appear to be essential to that evaluation," Leon said in the ruling.

Under the Tunney Act, Leon has the authority to review antitrust concerns in the DOJ's settlement agreement allowing CVS to acquire Aetna, but he cannot deny the merger outright.

BACKGROUND

On October 10, 2018, the DOJ and five states brought a civil antitrust suit challenging the CVS and Aetna merger.

The DOJ approved the deal with the condition that Aetna divest of its Medicare Part D plans, which it did to WellCare. CVS Health and Aetna closed in November 2018.

On February 25, the DOJ filed an entry for final judgment through a consent agreement. The contents of that agreement is now under review by Judge Leon.

Last week, the American Medical Association filed a motion to have its healthcare and antitrust witnesses testify, after CVS and the DOJ asked the judge to exclude or limit testimony they said was outside of the scope of review.
 
ON THE RECORD

"Amici have persuasively argued, in effect, that an assessment of the proposed judgment on the public interest must take into account, among other things, the ways the divestiture remedy may be affected by PBM markets. The court will, therefore, hear testimony that concerns, in part, the impact of the merger on PBM markets," Leon said.

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com

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