Department of Justice Responds to Consumer Comments on CVS and Aetna Merger, Dismisses Concerns
On Wednesday, the Department of Justice filed a response to objections to the merger of the health insurance company Aetna and CVS, the pharmacy benefit manager (PBM) and pharmacy retailer. Consumer advocates, doctors and hospitals, pharmacists, and others wrote to DOJ expressing concerns that the merger would harm competition and consumers. In their response, DOJ dismissed these concerns, stated that CVS's acquisition of Aetna will benefit consumers, and implied that many concerns raised are outside their purview.
In response to the competitive concerns posed by the CVS and Aetna merger, DOJ required Aetna to divest all its individual prescription drug plans to WellCare Health Plans, and provide WellCare with access to records and employees needed to preserve competition. This remedy was quite small compared to the massive scale of the $69 billion merger, and DOJ received 173 comments on their proposed final judgement, most of them quite critical of the acquisition.
But in their response, the Justice Department is dismissive and flippant. Their response claims that the final judgment is the result of a "thorough, comprehensive investigation", that the judgment includes robust mechanisms that the government can use to monitor the companies and preserve competition, and that WellCare has extensive experience and will be able to compete effectively.
Some consumer groups observed that WellCare paid a very lower price per life for the divestiture-only $45-and that this raises concerns whether WellCare will be able to successfully compete in health insurance markets. DOJ's response? They state that a low price paid for divestiture assets may just mean that the purchaser (WellCare in this case) is getting a bargain, and that they have assurances that WellCare intends to compete in the affected markets.
Effectively DOJ is rejecting all criticisms by consumer, health care providers, and other groups, and responding that the merger won't lead to any problems. We have assurances from the two companies, they say, so trust us!
Ohio pharmacists delivered particularly harsh criticisms of the merger. But DOJ not only dismisses these criticisms, but they argue that Judge Richard Leon has no legal power to consider them. Antitrust lawyer and expert David Balto said "the judge has made it clear to them that he is concerned about (the objections raised) by doctors and pharmacies and the effect on the overall health-care markets." He predicted that Judge Leon would not be pleased with DOJ's response.
We are disappointed with DOJ's response to these comments-we hoped that the Justice Department would take them into account and strengthen the final judgment on the merger in order to protect consumers. We hope that Judge Leon will use his authority to do just that.