December 15, 2018 / 12:30 AM / a month ago

CVS defends settlement that allowed Aetna merger as judge assesses

WASHINGTON (Reuters) - CVS Health Corp (CVS.N) defended on Friday an agreement with the U.S. Justice Department which allowed it to purchase health insurer Aetna for $69 billion, a settlement that a federal judge is still assessing.

FILE PHOTO: Shoppers walk outside a CVS store and pharmacy in Medford, Massachusetts, U.S. December 4, 2017. REUTERS/Brian Snyder/File Photo

The Justice Department approved the merger of CVS, a U.S. pharmacy chain and benefits manager, and Aetna in October on condition that Aetna sell its Medicare prescription drug plan business to WellCare Health Plans Inc (WCG.N). That sale was completed in November.

Now, the Justice Department and companies have found themselves in the unusual position of defending their antitrust settlement to a skeptical federal judge. Most judges approve consent decrees aimed at resolving competition concerns with no fanfare, and deals normally close before the judge rules.

But Judge Richard Leon of the U.S. District Court for the District of Columbia wrote in an order that he was “less convinced” than the government that the agreement would resolve antitrust concerns. He also has seemed annoyed that CVS closed its purchase of Aetna in October before his ruling.

In its brief, filed on Friday, CVS said that the deal had been extensively reviewed and urged the judge to allow the companies to continue integrating while he examines the settlement reached with the government.

CVS also noted that Aetna would be run separately from CVS, including decisions pricing and product offerings, during the court process.

In its filing, the government urged the judge to allow the companies to press on with integration, saying he did not have the power to stop the merger, only to reject the settlement.

“The United States remains mindful of the court’s responsibility to independently determine whether the proposed settlement is in the public interest and looks forward to discussing why the settlement meets that standard,” the government said.

While CVS and Aetna operate in largely separate business segments, the deal attracted opposition from groups including the American Medical Association and independent pharmacists, represented by the Pharmacists Society of the State of New York and Pharmacists United for Truth and Transparency.

The two pharmacist groups asked Leon to allow them to argue against the deal.

“We are asking the court to stop the consolidation so that the concerns of patients, providers and consumers can be heard,” said Debbi Barber, president of New York pharmacists.

Reporting by Diane Bartz, Editing by Rosalba O'Brien

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