Judge Approves Settlement Allowing CVS-Aetna Merger -- WSJ
September 05 2019 - 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 (September 5, 2019).
WASHINGTON -- A federal judge on Wednesday approved a Justice
Department settlement that allowed CVS Health Corp.'s nearly $70
billion acquisition of health insurer Aetna Inc., removing a cloud
of uncertainty for the merged company.
U.S. District Judge Richard Leon had spent months questioning
whether the settlement did enough to protect competition and
consumers in health-care markets, raising the possibility that he
might not approve it.
The judge, in a first for a court review of a government merger
settlement, convened hearings to consider live witness testimony
from the deal's critics who said the Justice Department's deal with
the companies was inadequate.
Judge Leon on Wednesday said the critics' testimony ultimately
was unpersuasive. He said the health-care markets at issue in the
case "are not only very competitive today, but are likely to remain
so post-merger."
The settlement "is well within the reaches of the public
interest," the judge concluded.
The Justice Department approved the CVS-Aetna deal nearly a year
ago, requiring CVS to sell off Aetna's Medicare prescription
drug-plan business.
CVS completed the acquisition weeks later and has been moving
forward with the Aetna business ever since. It sold Aetna's
Medicare assets to WellCare Health Plans Inc., as the department
required.
The merger combined the nation's third-largest health insurer
with CVS's sprawling network of pharmacies and its
pharmacy-benefit-management business. The companies argued that
their combination could lower costs and improve health care for
consumers.
"CVS Health and Aetna have been one company since November 2018,
and today's action by the district court makes that 100 percent
clear," a CVS spokesman said. "We remain focused on transforming
the consumer health care experience in America."
An array of parties, including the American Medical Association
and consumer groups, lodged objections to the merger, saying the
deal would have anticompetitive effects throughout the health-care
supply chain, giving CVS an outsize role.
Judge Leon said while the complaints warranted serious
consideration, the evidence wasn't sufficient to reject the
government's settlement with the companies. He rejected critics'
arguments that the merger would harm markets for Medicare
prescription drug plans. He also said CVS is unlikely to use its
strong market position in the management of pharmacy benefits to
disadvantage companies that compete with CVS's newly expanded
health-insurance business.
The AMA expressed disappointment in the ruling. "Despite an
unprecedented review that dragged many details of this merger into
the light, today's decision ultimately fails patients, will likely
raise prices, lower quality, reduce choice, and stifle innovation,"
AMA president Patrice A. Harris said.
Wednesday's ruling will likely come as a relief to the Justice
Department, which has seen repeated difficulties in Judge Leon's
courtroom. The judge, while questioning whether the DOJ did enough
to address the CVS-Aetna merger, last year rejected the
department's bid to block AT&T Inc. from acquiring
entertainment company Time Warner.
Assistant Attorney General Makan Delrahim, the department's
antitrust chief, said the settlement "provides a comprehensive
remedy to the harms the Justice Department identified." Approval of
the settlement "protects seniors and other vulnerable customers,"
he said.
Write to Brent Kendall at brent.kendall@wsj.com
(END) Dow Jones Newswires
September 05, 2019 02:47 ET (06:47 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
CVS Health (NYSE:CVS)
Historical Stock Chart
From May 2024 to Jun 2024
CVS Health (NYSE:CVS)
Historical Stock Chart
From Jun 2023 to Jun 2024