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The Department of Justice has lost its fight to limit certain witness testimony in the ongoing federal review of CVS Health’s takeover of Hartford insurer Aetna, setting the stage for a hearing early next month that could help decide the fate of the $69 billion merger.
U.S. District Judge Richard J. Leon on Monday ruled that critics of the deal, including the American Medical Association, will have a chance to testify in his courtroom as his seven-month-long independent probe of the case nears a long-awaited conclusion sometime this summer, according to a report from Reuters.
The Justice Department, which threw its support behind the CVS-Aetna consolidation late last year after the two companies met the terms of its anti-trust settlement, had sought to block input from the American Medical Association and other critics on the grounds that they would inevitably raise the issue of anti-competitive damages. Under the Justice Department’s interpretation of regulations surrounding large-scale merger agreements, the court does not have the authority to parse that particular dimension of the case.
With that challenge now dismissed, Leon is expected to hear from a total of six expert witnesses put forward by backers and opponents of the combination in a hearing starting June 3.
Citing a filing from the U.S. District Court from the District of Columbia, Reuters reported that Leon ordered up to three days of hearings, though the session could run shorter.
Leon’s latest ruling opens a new chapter in the nearly 18-month-long regulatory saga surrounding the industry-altering merger.
Rhode Island-based CVS Health, which operates the nation’s largest retail pharmacy chain and the prescription benefit management subsidiary CVS Caremark, first announced plans to acquire Aetna in December 2017. By October of the following year, the partners had obtained the blessings of numerous state insurance departments, including Connecticut’s, and agreed to a Justice Department consent decree that forced Aetna to sell off its standalone Medicare Part D prescription drug business to avoid potentially damaging market concentration.
Anticipating a customary quick stamp of approval from the federal courts, CVS Health and Aetna publicly closed the pending deal on Nov. 28.
But Leon threw a wrench into the proceedings and surprised Wall Street and health care industry insiders by publicly denouncing the government’s settlement, which he said addressed “one-tenth of 1 percent” of the possible negative outcomes of the buyout. Within days of the closing, he launched an independent investigation under a 45-year-old anti-trust law and ordered the two companies to keep some of their operations separate until he issues his final ruling.
While analysts believe a complete rejection of the acquisition attempt is unlikely, next month’s hearings will likely give the American Medical Association and other detractors a chance to publicly air their displeasure with the takeover, which they argue will ultimately raise prices for consumers and crowd smaller health services companies out of the market.
Shortly after the Justice Department submitted its consent decree, the physicians association issued a statement expressing concern that government attorneys had not adequately addressed the threat of a lopsided health care market and its potential impact on patients.
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Read HereThis special edition informs and connects businesses with nonprofit organizations that are aligned with what they care about. Each nonprofit profile provides a crisp snapshot of the organization’s mission, goals, area of service, giving and volunteer opportunities and board leadership.
Hartford Business Journal provides the top coverage of news, trends, data, politics and personalities of the area’s business community. Get the news and information you need from the award-winning writers at HBJ. Don’t miss out - subscribe today.
Delivering Vital Marketplace Content and Context to Senior Decision Makers Throughout Greater Hartford and the State ... All Year Long!
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