WOONSOCKET — Should a federal court review of the CVS Health Corp.-Aetna Inc. merger last several months, the judge and pharmacy-health care company have agreed to quarterly reports certifying the companies’ operations remain separate.
Despite the deal getting approval from the U.S. Department of Justice, an antitrust law called the Tunney Act requires mergers and acquisitions to receive court approval.
In a Dec. 21 memorandum, Washington, D.C., U.S. District Judge Richard Leon accepted CVS’ offer to provide regular sworn statements that it is continuing four proactive steps separating the two companies. CVS put the precautions in place Dec. 14 to allay the judge’s concern that Aetna and CVS assets would be kept separate during his review of the merger, according to the document.
On Dec. 13, the New York Post reported Leon was considering blocking the merger outright with an injunction. In the order, the judge referenced his earlier suggestion that a court-appointed monitor oversee the continued separation of the companies, an option he passed over in favor of CVS’ self-reporting plan.
Forbes reported that analysts saw agreement as a positive for the company and investors, as Leon did not fully halt the integration of the two companies.
Those steps agreed to were:
- Aetna’s health insurance business will be operated as a separate and distinct unit from CVS retail pharmacy and pharmacy benefit manager CVS Caremark within the CVS Health enterprise
- Aetna will maintain its historical control over the pricing and product offerings brought to market
- Aetna personnel will retain their current compensation and benefits
- CVS Health has and will maintain a firewall to prevent the exchange of competitively sensitive information between CVS Health and Aetna
“At a Dec. 18, 2018, hearing in this matter, I indicated these steps taken by CVS were constructive and appropriate,” Leon wrote in the memorandum.
CVS has also pledged not to alter any of the measures without providing 30 days’ notice along with an explanation of the reason for the change.
“Based on CVS’ constructive and appropriate representations, I am satisfied that, so long as these measures remain in place, the assets involved in the challenged acquisition will remain sufficiently separate as to facilitate and complete the statutory review…” Leon wrote in the memorandum.
The quarterly reports are scheduled to begin Jan. 4, 2019, according to the document.
Rob Borkowski is a PBN staff writer. Email him at Borkowski@PBN.com.
