US: CVS-Aetna merger hearing day 1

US District Judge Richard Leon in Washington, D.C., kicked off a three-day hearing as he considers whether to sign off on the U.S. Justice Department’s approval of the merger. The judge must finally authorize the government’s decision under the Tunney Act, but it isn’t clear whether he can actually stop the CVS-Aetna deal as the two companies are largely operating as one.

During testimony on Tuesday, Judge Leon asked the American Medical Association’s expert witness Neeraj Sood whether his review of the merger should stop at Aetna’s divestiture of its Part D business, which was where the government had focused its antitrust scrutiny.

“Should I limit myself to (prescription-drug plans) or look at how these entities that have merged will impact the greater market?” Leon said.

Sood, a University of Southern California professor and director of research at USC’s Schaeffer Center for Health Policy & Economics, demurred that he wasn’t a lawyer but told Leon that from his personal vantage point the merger did raise broad concerns about competition that could affect the public outside the Part D market.

He also framed the transaction as a purchase of Aetna’s 21 million enrollees, who could be potentially steered toward CVS Health business offerings.