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CVS Health : Judge Approves Settlement Allowing CVS-Aetna Merger

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09/05/2019 | 02:50am EDT

By Brent Kendall

WASHINGTON -- A federal judge on Wednesday approved a Justice Department settlement that allowed CVS Health Corp.'s nearly $70 billion acquisition of health insurer Aetna Inc., removing a cloud of uncertainty for the merged company.

U.S. District Judge Richard Leon had spent months questioning whether the settlement did enough to protect competition and consumers in health-care markets, raising the possibility that he might not approve it.

The judge, in a first for a court review of a government merger settlement, convened hearings to consider live witness testimony from the deal's critics who said the Justice Department's deal with the companies was inadequate.

Judge Leon on Wednesday said the critics' testimony ultimately was unpersuasive. He said the health-care markets at issue in the case "are not only very competitive today, but are likely to remain so post-merger."

The settlement "is well within the reaches of the public interest," the judge concluded.

The Justice Department approved the CVS-Aetna deal nearly a year ago, requiring CVS to sell off Aetna's Medicare prescription drug-plan business.

CVS completed the acquisition weeks later and has been moving forward with the Aetna business ever since. It sold Aetna's Medicare assets to WellCare Health Plans Inc., as the department required.

The merger combined the nation's third-largest health insurer with CVS's sprawling network of pharmacies and its pharmacy-benefit-management business. The companies argued that their combination could lower costs and improve health care for consumers.

"CVS Health and Aetna have been one company since November 2018, and today's action by the district court makes that 100 percent clear," a CVS spokesman said. "We remain focused on transforming the consumer health care experience in America."

An array of parties, including the American Medical Association and consumer groups, lodged objections to the merger, saying the deal would have anticompetitive effects throughout the health-care supply chain, giving CVS an outsize role.

Judge Leon said while the complaints warranted serious consideration, the evidence wasn't sufficient to reject the government's settlement with the companies. He rejected critics' arguments that the merger would harm markets for Medicare prescription drug plans. He also said CVS is unlikely to use its strong market position in the management of pharmacy benefits to disadvantage companies that compete with CVS's newly expanded health-insurance business.

The AMA expressed disappointment in the ruling. "Despite an unprecedented review that dragged many details of this merger into the light, today's decision ultimately fails patients, will likely raise prices, lower quality, reduce choice, and stifle innovation," AMA president Patrice A. Harris said.

Wednesday's ruling will likely come as a relief to the Justice Department, which has seen repeated difficulties in Judge Leon's courtroom. The judge, while questioning whether the DOJ did enough to address the CVS-Aetna merger, last year rejected the department's bid to block AT&T Inc. from acquiring entertainment company Time Warner.

Assistant Attorney General Makan Delrahim, the department's antitrust chief, said the settlement "provides a comprehensive remedy to the harms the Justice Department identified." Approval of the settlement "protects seniors and other vulnerable customers," he said.

Write to Brent Kendall at brent.kendall@wsj.com

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EBIT 2019 15 012 M
Net income 2019 6 583 M
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Yield 2019 3,11%
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