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."

Go deeper

World coronavirus updates

Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Axios Visuals

Japan's economy minister outlined plans on Monday to end the nationwide state of emergency as the number of new novel coronavirus cases continues to decline to less than 50 a day, per Bloomberg. Japan has reported 16,550 cases and 820 deaths.

By the numbers: Over 5.4 million people have tested positive for the virus as of Monday, and more than 2.1 million have recovered. The U.S. has reported the most cases in the world (over 1.6 million from 13.7 million tests). The U.K. is reporting over 36,800 deaths from the coronavirus — the most fatalities outside the U.S.

Coronavirus dashboard

Illustration: Aïda Amer/Axios

  1. Global: Total confirmed cases as of midnight ET: 5,401,701 — Total deaths: 345,060 — Total recoveries — 2,149,407Map.
  2. U.S.: Total confirmed cases as of midnight ET: 1,643,238 — Total deaths: 97,720 — Total recoveries: 366,736 — Total tested: 14,163,195Map.
  3. World: White House announces travel restrictions on Brazil, coronavirus hotspot in Southern Hemisphere Over 100 coronavirus cases in Germany tied to single day of church services — Boris Johnson backs top aide amid reports that he broke U.K. lockdown while exhibiting symptoms.
  4. Public health: Officials are urging Americans to wear masks headed into Memorial Day weekend Report finds "little evidence" coronavirus under control in most statesHurricanes, wildfires, the flu could strain COVID-19 response
  5. Economy: White House economic adviser Kevin Hassett says it's possible the unemployment rate could still be in double digits by November's election — Public employees brace for layoffs.
  6. Federal government: Trump attacks a Columbia University study that suggests earlier lockdown could have saved 36,000 American lives.
  7. What should I do? Hydroxychloroquine questions answeredTraveling, asthma, dishes, disinfectants and being contagiousMasks, lending books and self-isolatingExercise, laundry, what counts as soap — Pets, moving and personal healthAnswers about the virus from Axios expertsWhat to know about social distancingHow to minimize your risk.
  8. Other resources: CDC on how to avoid the virus, what to do if you get it, the right mask to wear.

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Updated 1 hour ago - Politics & Policy

U.S. coronavirus updates

Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Andrew Witherspoon/Axios. This graphic includes "probable deaths" that New York City began reporting on April 14.

President Trump doubled down on his push to reopen schools, tweeting late Sunday: "Schools in our country should be opened ASAP."

Zoom in: Trump pushed back on NIAD Director Anthony Fauci cautioning against the move earlier this month, calling his concerns "not an acceptable answer."