top of page

Federal Judge Is Wary of CVS-Aetna Merger at Two-Day Hearing

Last week. Judge Richard Leon of the District Court for the District of Columbia held a hearing on the CVS-Aetna merger. During a two day hearing, Leon heard from critics and supporters of the transaction and expressed skepticism about the Department of Justice's approval of the merger and whether it would benefit consumers and competition. The judge concluded by setting another hearing with oral arguments that will likely take place in mid July.

The merger of the pharmacy and pharmacy benefit manager (PBM) CVS and the health insurance company Aetna is a massive $69 billion megamerger that would hurt consumers, greatly reduce competition and consumer choice, and lead to higher prices. During the first day, the judge heard from three opponents of the merger: Professor Neeraj Sood of the University of South California, Dr. Michael Wohlfeiler of the AIDS Healthcare Foundation, and Diana Moss, President of the American Antitrust Institute.

Professor Sood, a leading expert on PBMs, spoke about CVS's anticompetitive conduct, the lack of transparency in the PBM market, and how the merger would allow the company to charge higher prices and hurt competition. He emphasized that DOJ's planned divestiture was pitifully inadequate to solve the problem. Sood also noted that the merger would hurt seniors, who disproportionately have chronic conditions and tend to be lower income.

The next witness was Dr. Michael Wohlfeiler of the AIDS Healthcare Foundation (AHF). He did an excellent job of documenting foreclosure concerns for pharmacies and Judge Leon was quite interested in this. AHF provides healthcare to people with HIV and has a "close touch" model that is very effective. They are concerned that the CVS-Aetna merger will harm that model. In his testimony, Dr. Wohlfeiler laid out how a combined CVS-Aetna company would exclude pharmacies, provider weaker services to its rivals, harm patient privacy, and generally hurt patients. He said that PBMs squeeze independent pharmacies out of business and create another level of bureaucracy between patients and providers. The CVS-Aetna merger would make all of these problems worse.

The final witness opposing the merger was Diana Moss. She testified about how the PBM market was quite fragile and concentrated and how the merger would harm competition and lead to higher prices.

The next day, supporters of the merger attempted to counter the criticisms from the first day of the hearing, but without much success. Judge Leon was very skeptical of their claims that the PBM market was competitive-he pointed out that three massive PBMs (CVS Caremark, Express Scripts, and OptumRx) control at least 70% of the market and that most companies, if their PBM acts badly, don't have many other options.

At the end of the hearing, Judge Richard Leon announced there would be a two week time period for individuals and organizations to submit supplements to their briefs on the merger. He also announced there will be a follow-up hearing with oral arguments, most likely in mid July.

This follow-up hearing is an excellent opportunity for consumer advocates to highlight the harmful effects of the CVS-Aetna merger, the lack of PBM competition, and its effect on pharmacies and consumers. We hope that Judge Leon will carefully listen to the arguments and reject the merger.

Featured Posts
Recent Posts
Search By Tags
No tags yet.
Follow Us
  • Facebook Basic Square
  • Twitter Basic Square
  • Google+ Basic Square
bottom of page