December trial date puts Aetna-Humana deal at risk

DC District Courthouse

With the trial date now set for December, the antitrust case against Aetna and Humana will not be settled before the end of the year--a timeline that could cause the deal to collapse.

Aetna had requested its trial take place this fall, arguing in a court filing that the acquisition is subject to a “drop dead” date of Dec. 31. If that deadline isn't met, Humana could decide to walk away.

U.S. District Judge John Bates said Wednesday he expects a ruling on the Aetna-Humana case around mid-January, Bloomberg reports.

Bates was originally was assigned both that case and the Anthem-Cigna case. However, he has said he would not be able to hold both trials by the end of the year as requested by the insurers, and thus sent Anthem-Cigna to another judge. She has yet to set a trial date.

The December trial date for Aetna and Humana represents a compromise for the insurers and the DOJ, as the latter argued it needed more time to prepare its case against the deal, notes the Wall Street Journal. The government originally pushed for a trial date of early 2017 for both merger cases, FierceHealthPayer reported.

But that date does have consequences for the deal with Humana, Aetna lawyer John Majoras tells Bloomberg, calling it "another plank in the case."

During the trial, Bates must weigh a slew of factors including the merits of Aetna’s proposed divestiture of Medicare Advantage assets to Molina, which the insurer argues will remedy the government’s antitrust concerns.

That proposed remedy as well as Aetna and Humana’s joint testimony has the potential to address the DOJ’s concerns, according to an antitrust specialist who briefed Leerink Partners analysts, though that strategy is not without its challenges.

Indeed, the DOJ has been highly skeptical of such divestitures, with Principal Deputy Associate Attorney General Bill Baer saying that “we have zero confidence” such proposals will protect the competitive status quo in affected markets, FierceHealthPayer has reported.

- read the Bloomberg report
- here’s the WSJ article
- check out the Leerink research note