Jun 14, 2019

What can happen with the CVS-Aetna merger

CVS Health bought Aetna in a deal worth $78 billion. Photo: Justin Sullivan/Getty Images

Federal judge Richard Leon is raising antitrust concerns about CVS Health's $78 billion takeover of Aetna, but legal experts say he simply doesn't have authority to nix the deal.

Why it matters: The biggest companies in health care keep getting bigger, and critics fear anticompetitive effects — but nothing has actually slowed the industry's rapid consolidation.

Driving the news: A New York Post article claimed Leon "appears to be nearing a surprise move to block" the CVS-Aetna deal. But that isn't quite accurate.

  • "[Leon] can't stop the deal because it's already happened," said Joe Krauss, a former antitrust attorney at the Federal Trade Commission now at Hogan Lovells.

Details: CVS and Aetna completed their transaction last November. To satisfy antitrust concerns, the Department of Justice required Aetna to sell its Medicare prescription drug plans.

Where it stands: Leon can either approve that settlement, or "he can say the remedy was insufficient," said Andrea Agathoklis Murino, a former DOJ antitrust attorney now at Goodwin Procter. But he can't undo the merger.

  • If Leon rejects the settlement, DOJ would likely appeal or negotiate a new remedy with CVS and Aetna.
  • DOJ also could order CVS and Aetna to unwind their merger, but that process is messy, and it's never happened under the type of proceedings happening here.

Between the lines: The settlement — making Aetna sell its Medicare drug plans — wouldn't materially change the market share for those policies, nor does it address concerns of combining health insurance and drug benefits.

  • "This is a highly consolidated market," said Mike Landis, litigation director for the U.S. Public Interest Research Group, which opposed the merger. "We hope DOJ will see the light."

Go deeper: Read the transcripts of this month's CVS-Aetna proceedings.

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