Lack of competition doesn’t just lead to higher prices, it stifles innovation
This week’s testimony in the merger trial of Anthem and Cigna has been more focused on innovation than the first week, which largely laid groundwork about the companies and the market. David Dranove, a prominent health care economist and the DOJ’s key expert economist, made the case that Anthem’s absorption of Cigna will deprive the market of innovation in future years. While it is true that Anthem could rise to the challenge and change health insurance for the better, we wou
Unsealed court documents show deep divide between merging parties
Testimony from Anthem CEO Joe Swedish and Cigna CEO David Cordani has been unsealed following a request from Judge Jackson for greater transparency from the parties. The companies originally wanted testimony sealed to protect sensitive business information from being gleaned by competitors. However, once the testimony was actually given, the parties determined almost no commercially sensitive information had been shared and consented to the court releasing the testimonies. An
Most recent horizontal merger case offers clues for Anthem outcome
We wrote last week on our blog that the judge assigned to the Anthem-Cigna merger is likely to
look at recent precedent, specifically the Staples-Office Depot merger that was blocked this past
May. The case is not only the most recent major antitrust merger case brought by the
government, it also has parallels to the Anthem-Cigna case which may illuminate how the
decision will be made.
Staples and Office Depot are what is called “office supply superstores” or OSSs. This
Transparency at Issue in Merger Trial
Transparency is a hot topic in politics right now, but yesterday at the trial of Anthem and Cigna, we got a reminder that judicial transparency is also an important issue. The second day of trial began with a continuation of questioning Anthem CEO Joseph Swedish, however that was quickly put on hold to clear the courtroom on non-essential personnel. This was done so that attorneys from both parties could move onto topics Anthem desired to have sealed from the public, a reques
Anthem-Cigna Trial Off to Fascinating Start
The trial began today to challenge the $48 billion merger between Anthem and Cigna, two of the nation’s largest health insurers. The suit by the Justice Department to block the merger was driven by concerns over effects on consumers and whether Anthem would be able to use its considerable muscle to drive down reimbursements to providers. In their opening arguments, Mr. Jacobs for the U.S. and Mr. Curran for Anthem laid out their arguments for why Judge Amy Berman Jackson shou
How to talk about the merger trials like a pro
In the complaint filed by the DOJ to enjoin the merger of Anthem and Cigna, the merger is characterized as an attempt to “combine the few remaining commercial health insurance options for business and individuals in markets throughout the country.” This Monday, the trial will begin and months of speculation about how the two sides will present their case will be answered. But as much as the trial will satisfy our desire to know what the parties have been working on all these
Good on paper isn’t good enough
Customers count for a lot in merger cases. Congress passed the Clayton Act 102 years ago because the traditional tools of antitrust enforcement were not sufficient to protect consumers. Therefore Congress declared that any merger that may substantially lessen competition is prohibited. The Clayton Act requires the government show probable anticompetitive effects, and does not require proven effects. This allows anticompetitive conduct to be stopped before it occurs. There are
Anthem-Cigna trial one week away
The parties in the trial of Anthem and Cigna met today for a pretrial conference, in which they would discuss “mechanics, not merits,” as per instructions from the judge, Amy Berman Jackson. Plaintiff states listened by phone, something we learned today they will be able to do during the trial, however, the lawyers will not be able to ask questions of any witnesses unless they are present. Judge Jackson went over the government’s motions to exclude certain declarations by exp
The election won't matter for health insurance merger trials
As millions contemplate the meaning of the election of Donald Trump as our 45th President, some might speculate this may lead to the demise of the Justice Department’s challenges to the Aetna-Humana and Anthem-Cigna mergers. They could not be more wrong. First, federal antitrust litigation is clearly a nonpartisan sport. Though the officials who run the DOJ are political appointees, the folks who work in the trenches, the talented trial lawyers and economists, are professio
Sovaldi paved the way for 2016 drug price fight
At the beginning of this year, Massachusetts Attorney General Maura Healey sent a letter to Gilead Pharmaceuticals asking the company to revisit its pricing strategies for two Hepatitis C drugs, Sovaldi and Harvoni. Healey suggested the price of the drug restricts access and places a large financial burden on the Commonwealth’s budget, especially as opioid addiction drives Hep C morbidity higher. Both drugs carry a list price of nearly $100,000 per treatment. Almost one year
