CVS, DOJ swipe back at federal judge's concerns about Aetna deal

justice scales and gavel
Judge Richard Leon will discuss the arguments CVS and the Justice Department presented in court on Tuesday, Dec. 18. (Getty/BrianAJackson)

The Department of Justice (DOJ) and CVS both discouraged a federal court from ordering CVS to keep its acquisition of Aetna separate heading into a crucial court hearing on Tuesday. 

In briefs filed with the U.S. District Court for the District of Columbia, both parties argued that there is no legal or practical basis for keeping the Aetna business separate while the court reviews the terms of the deal under the Tunney Act. The Tunney Act allows a court to determine whether a DOJ-imposed antitrust settlement—in this case, the department’s mandate that Aetna sell its Medicare Part D business—is in the public’s interest. 

In the courtroom earlier this month, Judge Richard Leon questioned why DOJ and CVS want to complete the deal quickly. The divested business constitutes just 0.1% of the entire $69 billion deal, he said, suggesting that may not be sufficient to uphold competition in the market.

In this brief, DOJ called the judge's concern “irrelevant.” 

“The government challenged the merger in the only markets where it concluded that the merger would result in likely harm, and the divestiture goes beyond those markets to include Aetna’s entire individual PDP business nationwide,” it wrote. 

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Moreover, district courts may not examine practices the government did not challenge, DOJ said, citing case law. 

Similarly, CVS said the government has already ensured that the transaction will not be anticompetitive, going as far as to list the many steps the DOJ took to review the $69 billion deal. 

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Attorneys and economists evaluated “vertical foreclosure theories, information exchange issues, Medicare Part D competition, merger efficiencies, and the consumer benefits generated by prior vertical integrations in the industry,” using their own analyses as well as ones it and Aetna provided, CVS wrote. 

The deal will not only maintain competition but improve it by making the products and services available to consumers more extensive, more efficient and better priced, the pharmacy chain argued. In fact, by disrupting the acquisition process, the court would go against the public’s interest by depriving them of these benefits, it said. 

A hearing to address the court's remaining questions is scheduled for Tuesday. Judge Leon has already expressed skepticism about the settlement, accusing DOJ and CVS attorneys of treating him like a "rubber stamp."