AAI Asks DOJ to Explain Its Approval of CVS-Aetna Merger

On December 17, AAI filed Tunney Act comments with the Antitrust Division of the U.S. Department of Justice requesting that the Division explain its decision to accept a consent decree in the CVS-Aetna merger that addresses the horizontal but not the vertical anticompetitive effects threatened by the transaction.

On October 10, the Antitrust Division approved the merger of CVS and Aetna subject to a divestiture of Aetna’s Medicare Part D prescription drug plan (PDP) contracts, because CVS and Aetna had competed head-to-head in many PDP markets.  However, the consent decree does not address the risk that the combination of CVS and Aetna will create stronger incentives to foreclose rival pharmacies, pharmacy benefits managers and health insurers, raise two-level entry barriers, and lead to other exclusionary anticompetitive effects. In a letter to the Antitrust Division on March 26, 2018, AAI had set forth these risks and encouraged the Division to block the merger.

AAI’s comments renew AAI’s objections to the vertical aspects of the transaction and argue that an explanation is warranted for two reasons. First, a district court is not obliged to accept a consent decree based on a complaint that is drafted so narrowly as to make a mockery of judicial power or to approve a remedy that is too narrow in scope given the conduct alleged in the complaint.  Giving a fulsome explanation of the Division’s rationale for ignoring vertical concerns, both in PDP markets and otherwise, would assist the Court in determining whether the complaint or proposed remedy are unduly narrow. Second, the Antitrust Division itself has emphasized the importance and value of subjecting government processes and decision-making to aggressive scrutiny.  Here, transparency is not only necessary but especially valuable given the unique significance of this merger, which has attracted national media attention, has been the subject of a Congressional hearing, and implicates core aspects of human health and well being.