US: DOJ backs CVS-Aetna buyout in latest filing

The Justice Department (DOJ) is standing by its defense of CVS Health’s US$69 billion acquisition of Hartford insurer Aetna.

In a 38-page document filed Wednesday, February 13, in the US District Court for the District of Columbia, government lawyers argued that their proposed settlement of the deal, which called for Aetna to sell off its standalone Medicare Part D prescription drug business, is sufficient to ensure that the merger does not destabilize the healthcare marketplace or hurt consumer choice.

The federal government’s most recent statement on the merger was intended to answer public comments submitted in the case over the last three months. Organizations like the American Medical Association and the National Community Pharmacists Association, together with business and healthcare industry groups, raised a variety of issues to the court, including concerns about anti-competitive consolidation and vertical integration in the health care sector.

The DOJ responded by noting that its consent decree keeps CVS and Aetna from consolidating interests in the one business where the companies competed directly and bolsters the competitiveness of Florida-based WellCare Health Plans, which absorbed Aetna’s Medicare Part D unit.

In response to charges that CVS could raise prices for drugs and services post-merger and abuse their market share by steering customers to Aetna insurance plans, government lawyers argued that neither route would prove profitable for the parent company. Customers would almost certainly abandon CVS for a lower-priced competitor, they said, and Aetna has too small a share of retail pharmacy purchases for the strategy of “customer foreclosure” to be effective.