US judge approves CVS purchase of Aetna insurer

WASHINGTON (Reuters) – Federal Judge Revises Department of Justice Decision Granting US Pharmacy Chain and Benefits Manager CVS Health Corp (CVS.NTo merge with health insurer Aetna said on Wednesday that the deal was actually legal under competition law.

Judge Richard Leon, of the US District Court of Columbia, was reviewing a government plan announced in October to allow the merger, provided that Aetna sells his Medicare prescription drug plan business to WellCare Health Plans Inc. (WCG.N) Both offers are already closed.

Leon had initially hesitated to approve the terms of the merger and had insisted on hearing the critics of the agreement, but had finally decided to grant the motion for approval of the consent.

But he tackled the usual business practice of entering into multi-billion dollar deals while the judicial review, required by the Tunney Act, was still ongoing.

"If the Tunney Act is to make sense," writes Leon, "this must mean that no court should subscribe to a consent decree approving the amalgamation of" one of the largest companies in the United States "and of the "third largest health organization in the country". insurance company, & # 39; … simply because the government asks for it! "

In December, Leon said he was "less convinced" than the government that selling assets to WellCare would solve antitrust issues. Since then, Centene Corp. (CNC.N) agreed to acquire WellCare for $ 15.27 billion.

Deputy Attorney General Makan Delrahim, head of the Antitrust Division of the Ministry of Justice, welcomed Leon's decision.

CVS stated that the judge's decision had confirmed that CVS and Aetna had already merged.

"CVS Health and Aetna have been a single company since November 2018, and the actions taken today by the District Court make this clear. We remain focused on transforming the consumer experience in health care in America, "CVS spokeswoman T. J. Crawford said in a statement by e-mail.

Among the critics of the CVS-Aetna agreement were the American Medical Association and the AIDS Healthcare Foundation.

The US PIRG, another critic, expressed skepticism that the savings from the merger would end up in the pockets of consumers.

"CVS Caremark has used its market power both to increase the cost of drugs for consumers and to scam the government, instead of passing on the promised savings to consumers," PIRG said in a statement.

In anticipation of Leon's approval, CVS agreed to allow Aetna to make critical product, pricing and personnel decisions on a temporary basis.

CVS is in the process of becoming a health care company and announced in June that it will offer more extensive health services, such as nutritional counseling and blood pressure testing, in 1,500 stores by the end of June. end of 2021.

Most consent agreements to strike antitrust agencies with companies to resolve competition concerns are approved by the federal courts without much difficulty under the 1974 Tunney Act, which requires courts to ensure that agreements are in accordance with the public interest.

Companies usually do not wait for the court's final approval before closing their transactions.