- Executives from CVS Health and Aetna sought to assure lawmakers that their $69 billion merger would create value for consumers and not result in anti-competitive behavior. They spoke at a hearing before the House Judiciary Regulatory Reform, Commercial and Antitrust Law Subcommittee on Tuesday.
- The hearing comes as the American Medical Association urged Congress to "closely scrutinize the pending merger deal," worried that it could reduce competition among pharmacy benefit managers, local health insurance markets and local retail pharmacy markets.
- Lawmakers queried the officials, but did not appear to oppose the merger outright.
Lawmakers on both sides of the aisle pressed top lawyers from the companies for a commitment to not act in anti-competitive ways, for example by funneling Aetna enrollees exclusively to CVS pharmacies.
"The healthcare sector is already highly concentrated, and there remains a concern that dominant firms, including a post-merger CVS-Aetna, would have the ability and the incentive to exclude competitors or diminish competition," said Judiciary Committee Ranking Member Jerrold Nadler, D-NY.
Thomas Moriarty, EVP and general counsel for CVS Health, argued that it wouldn't be in the business interests of the combined company to do so.
Moriarty also said the deal would create value for consumers through lowering of insurance premiums.
"If you look at Aetna today, we are the service partner to Aetna, it represents roughly 11-12% of CVS' revenue. The other 89, 88% sits with other health plans, other employer groups, et cetera. If we sought in any way to foreclose availability to all the services and creations we're going to make here as part of this to the rest of the market, we would have so much more to lose than gain," Moriarty said.
AMA, in a statement for the record, argued the merger would result in the removal of Aetna as a potential PBM market entrant.
"A CVS acquisition of Aetna would foreclose the one remaining major customer opportunity for would-be CVS competitors," AMA wrote.
Despite raising concerns that the deal would be bad for consumers and the healthcare system, AMA's statement did not ask Congress or regulators to block the deal.
Nor did lawmakers appear to urge anti-trust regulators to outright block the deal.
Following the hearing, Moriarty declined to comment on what additional information the U.S. Department of Justice recently asked for on the proposed deal. CVS previously said during its earnings call that the request was not unexpected, and said the merger was still expected to close in the second half of this year. Shareholders are set to vote on the deal March 20.