UPDATE: May 31, 2019: Judge Richard Leon of the U.S. District Court for the District of Columbia late Thursday rejected the government's bid to change procedures in the upcoming three-day hearing on the CVS-Aetna merger settlement agreement with DOJ, calling the government's request "nothing more than a thinly veiled motion to modify the procedures set forth in the Court's May 13, 2019 Memorandum Order." Leon said the government couldn't "identify any lack of clarity in the procedures set forth in that Memorandum Order, and it cannot credibly argue that the Tunney Act requires any of the modifications requested in its motion." Leon said courts have broad discretion to determine the appropriate procedures for taking testimony during a Tunney Act review.
- The American Medical Association pushed back Wednesday against the government's request that the judge tasked with reviewing the settlement agreement for the nearly $70 billion CVS-Aetna merger next week allow cross-examination at the upcoming hearing.
- The U.S. Justice Department filed papers last week asking a judge to modify its procedure for assessing whether the government's merger agreement with CVS is in the public interest. The government says the court's current procedure gives too much power to interests like AMA to frame the issues in the case.
- DOJ originally alleged the merger would harm competition in only the Medicare Part D market in some locations across the U.S. To alleviate the government's antitrust concerns, CVS and Aetna settled with the department by selling Aetna's Medicare Part D business. The sale allowed the merger to continue and the deal was closed in November.
The judge's latest order marks the most recent volley in what promises to be an unusual proceeding, according to antitrust experts. And it's no surprise that one of the biggest vertical mergers in the healthcare industry is causing waves in the courtroom, too.
Judge Richard Leon of the U.S. District Court for the District of Columbia is set to preside over a three-day hearing, starting Tuesday, in which he will hear testimony from six experts he picked from a pool of potential witnesses submitted by DOJ and by critics of the CVS-Aetna deal.
Leon is tasked with reviewing the settlement under the Tunney Act, which gives courts the power to review DOJ decisions.
"No court has ever taken testimony like this before nor has Tunney Act review taken this long," James Burns, a healthcare antitrust attorney with Akerman in Washington, told Healthcare Dive. Despite the closure of the CVS-Aetna deal last year, the agreement has not received final approval from Leon.
"The judge is very concerned and skeptical," David Balto, an antitrust attorney and former Federal Trade Commission official who is representing U.S. PIRG and Consumer Action, who oppose the merger, at the hearing, told Healthcare Dive. "He clearly sees competitive concerns."
But the government objected to the court's proposed hearing procedure to air those concerns. The Justice Department argued the procedure excludes the government from "meaningful participation" and fails to accord sufficient deference to its prosecutorial discretion. The government wants the opportunity to cross-examine witnesses at the hearing, something Leon previously said he would not allow.
The government also objected to the court's exclusion of two primary witnesses it put forward to rebut testimony of groups such as the AMA that oppose the deal. And the court's selection of three CVS witnesses doesn't remedy the problem, the government said, because the government's interests are not identical to CVS's interests.
In addition to seeking the ability to cross-examine witnesses and to present rebuttal evidence, the government wanted witness testimony limited to issues those opposing the merger already raised and not to veer into new territory. The Justice Department also wanted the judge to find that the materials the government submitted under the Tunney Act by themselves represent an adequate basis for the court to conclude the settlement is an adequate remedy for any anticompetitive harm alleged in the complaint.
Meanwhile, AMA opposed the government's bid to get the judge to clarify and amend the upcoming procedure under the Tunney Act. The group argued the court has broad discretion to evaluate the public interest in the case so there are no grounds for limiting the scope of witness testimony.