Federal Judge Orders New Hearing on CVS and Aetna Merger, Wants to Hear from Critics of the Deal

April 12, 2019

 The federal judge currently considering the merger of the pharmacy and PBM CVS and the health insurance company Aetna has ordered a hearing to hear from critics of the $69 billion merger.

 

Judge Richard Leon of the U.S. District Court for the District of Columbia said that he wants to listen to organizations and individuals who opposed the transaction. The merger closed in November 2018, but the judge criticized the Department of Justice's approval for failing to adequately protect consumers, and has refrained from giving final approval of the merger. While the Justice Department required Aetna to sell its prescription drug plans in order to merge with CVS, the divestiture was woefully inadequate to preserve competition.

 

The proposed hearing will likely take place in May and last a week. Numerous consumer groups, pharmacies, health care providers, and other organizations opposed the merger. The American Antitrust Institute opposed it as well. And Judge Leon ruled that in preparation for the hearing, the AIDS Healthcare Foundation, one of the most prominent groups against the deal, can proposed up to three witnesses who will be heard at the hearing.

 

This is a substantial victory for competition and consumers. In the past we have written about the competitive problems posed by the merger and how it will harm consumers. Divestitures frequently fail to restore competition, and when two massive companies such as CVS and Aetna merge, the results will be higher costs, lower quality of care, and less consumer choice. Consumers are already facing fewer choices and paying higher prices in a number of industries because of failed merger remedies in the airline, grocery store, dollar store, and rental car industries, and the health care sector also has major problems with increased consolidation and a lack of meaningful competition.

 

Judge Leon should carefully listen to the witnesses at the May hearing, and take their criticisms of the CVS and Aetna merger into account. He should then require the merging companies to more significant measures to safeguard consumer welfare, or if that is not possible, disapprove the merger altogether.

 

 

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