Judge Eases Criticism Of CVS Deal for Aetna -- WSJ
December 19 2018 - 3:02AM
Dow Jones News
By Brent Kendall
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (December 19, 2018).
WASHINGTON -- A federal judge on Tuesday softened his previous
suggestion that he would likely order 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, a
pharmacy-benefit manager with a network of pharmacies, 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 of products and services for its insurance
customers, and that CVS and Aetna wouldn't exchange competitively
sensitive information for the time being.
Judge Leon said CVS's proposal was constructive, and he
suggested that an outside monitor be brought in to ensure the
company lives up to those commitments.
Both CVS and the Justice Department were 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. 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.
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.
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 19, 2018 02:47 ET (07:47 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
CVS Health (NYSE:CVS)
Historical Stock Chart
From Apr 2024 to May 2024
CVS Health (NYSE:CVS)
Historical Stock Chart
From May 2023 to May 2024