- Federal Judge Richard Leon voiced doubts about whether CVS' $69 billion acquisition of Aetna gives the merged company too much leverage and what that would mean for consumers on the final day of an unprecedented hearing on the mega-deal.
- CVS witness Lawrence Wu, a former Federal Trade Commission staff economist, testified the merger didn't raise significant competitive concerns and that the government's remedy of requiring Aetna to sell off its Medicare Part D plan assets sufficiently resolved any issues.
- The judge was not convinced, and said he'd hear oral arguments in July. He warned the lawyers they might want to cancel summer vacation plans.
Those hoping for a wrap-up of the saga over the CVS-Aetna hearing should not expect an answer from Leon of the U.S. District Court for the District of Columbia anytime soon.
After hearing two days of witness testimony in a evidentiary hearing on the settlement agreement, Leon set oral argument in the case for mid-July.
But Wednesday's hearing offered clues to the aspects of the deal that most trouble Leon.
A key element of determining whether or not the settlement agreement is in the public interest "is whether or not the pharmaceuticals will be [offered] at a lower price and whether they're going to be more reasonably accessible," Leon said.
Leon engaged in some testy exchanges with CVS witness Wu, president of NERA Economic Consulting. Wu testified the divestiture of Aetna's Medicare Part D prescription drug plan (PDP) business to WellCare was sufficient to resolve the government's concerns about the merger of the two companies.
But Leon grew impatient when Wu repeatedly referred to CVS' pharmacy benefit management business Caremark instead of Caremark/CVS.
"Why do you keep calling it Caremark? CVS owns that, right? It's CVS; don't disassociate them," he told the witness. "It's CVS' PBM and it's one of the three PBMs that controls roughly 70% of the marketplace."
Leon also challenged Wu's assertion he "didn't see the [company's] bargaining leverage changing after the [merger] transaction."
"The leverage for merger purposes is the 21 million [Aetna] customers they acquire," he told Wu. "That's the leverage here, the 21 million additional customers, this huge collection of customers."
Leon also questioned whether WellCare would be able to compete vigorously with CVS in the Medicare Part D market. "Do you think WellCare has a comparable brand to Aetna?," he asked. "It's one of the biggest brands in the insurance industry."
The judge also heard testimony from Alan Lotvin, executive vice president for CVS Health, who testified on behalf of the pharmacy chain, and Terri Swanson, vice president of Medicare Product and Medicare Part D business, who testified on behalf of CVS and the government.