Feb 15, 2018

CVS lawsuit could have implications for Aetna merger

Photo by Justin Sullivan/Getty Images

When CVS agreed to acquire insurer Aetna last fall for $66 billion, some wondered about how the deal would impact CVS customers who have different insurance. Would they have to pay higher prices, be denied service, etc? Worst-case scenario sorts of stuff, but clearly matters that government regulators would examine.

Now there is a lawsuit in Florida that, were its allegations borne out, could give those regulators something to dig into.

The plaintiff is Sentry Data Systems, owned by private equity firm ABRY Partners, which is largely focused on facilitating a federal program (340B) that requires drugmakers participating in Medicaid to provide discounts on certain outpatient medicines. In short, it's a middle-man between the manufacturers and distribution locations like CVS pharmacies.

The claims

Sentry alleges that after CVS bought rival 340B company Wellpartner last summer, it told many Sentry customers that Wellpartner would become "the exclusive 340B program administrator for all CVS Health retail and specialty pharmacies."

  • Not only does Sentry believe some of its trade secrets were misappropriated by CVS, but also that the exclusivity move is anti-competitive — given how large CVS is within the 340B space. In some markets, for example CVS is the only option for such patients.
  • Key here is how CVS is allegedly tying two separate activities together (i.e, 340B administration and retail drug sales).
  • This is a relatively small case (albeit huge for Sentry), but discovery could provide some clues into what would come post CVS/Aetna.

A CVS spokesman tells Axios the suit is "without merit," adding:

"Despite Sentry being the nation’s largest administrator of 340B plans, it appears threatened by new competition and is trying to use unfounded antitrust allegations to stall the growth of a small competitor, Wellpartner."

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Coronavirus kills 2 Diamond Princess passengers and South Korea sees first death

Data: The Center for Systems Science and Engineering at Johns Hopkins, the CDC, and China's Health Ministry. U.S. numbers include Americans extracted from Princess Cruise ship.

Two elderly Diamond Princess passengers have been killed by the novel coronavirus — the first deaths confirmed among the more than 600 infected aboard the cruise ship. South Korea also announced its first death Thursday.

The big picture: COVID-19 has now killed more than 2,200 people and infected over 75,465 others, mostly in mainland China, where the National Health Commission announced 118 new deaths since Thursday.

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SoftBank to cut its stake to get T-Mobile's Sprint deal done

Illustration: Rebecca Zisser/Axios

T-Mobile and Sprint announced a revised merger agreement that will see SoftBank getting a smaller share of the combined company, while most shareholders will receive the previously agreed upon exchange rate. The companies said they hope to get the deal as early as April 1.

Why it matters: The amended deal reflects the decline in Sprint's business, while leaving most shareholders' stake intact and removing another hurdle to the deal's closure.