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United States v. CVS Health Corp.

United States District Court, District of Columbia

May 13, 2019

UNITED STATES OF AMERICA, et al., Plaintiffs,
v.
CVS HEALTH CORPORATION, et al., Defendants.

          MEMORANDUM ORDER

          RICHARD J. LEON JUDGE

         On October 10, 2018, the United States of America ("the Government") and the States of California, Florida, Hawaii, Mississippi, and Washington brought this civil antitrust suit to challenge the merger of CVS Health Corporation ("CVS") and Aetna Inc. ("Aetna"). Four months later, having negotiated a mutually agreeable divestiture of a part of Aetna's business, the Government filed a Motion for Entry of Final Judgment [Dkt. # 57] on February 25, 2019, seeking to settle this suit through a consent judgment. When settling a civil antitrust suit through a consent judgment, however, the Government must not only comply with the requirements of the Tunney Act, 15 U.S.C. § 16(b)-(h), but also be able to demonstrate to a Federal Judge that entry of the proposed final judgment is in the public interest, see Id. § 16(e).

         At the April 5, 2019 status hearing in this case, I indicated to the parties that it would probably be helpful to me in evaluating whether this proposed final judgment is in the public interest for the amid curiae participating in this matter to present one or more witnesses at a future hearing regarding the proposed final judgment. As such, 1 ordered the parties and amici, on April 8, 2019, to submit a list of potential witnesses, with a description of their potential testimony, for my consideration. See Order (Apr. 8, 2019) [Dkt. #70]. The Order made it very clear, however, that the Court, alone, would decide which, if any, of the potential witnesses would be called at a future hearing. See Id. at 2. Having reviewed the submissions by the American Medical Association [Dkt. # 74], Consumer Action and U.S. PIRG [Dkt. # 75], the AIDS Healthcare Foundation [Dkt. #76], the Government [Dkt. # 84], and CVS [Dkt. # 85], and based on my review of the record to date, the Court has decided that it would be most helpful for the following witnesses to be called at a hearing related to the Government's Motion for Entry of Final Judgment.

         For the ainici:

• Dr. Nccraj Sood, who may testify for up to two hours.
• Dr. Diana L. Moss, who may testify for up to one hour.
• Dr. Michael B. Wohlfeiler, who may testify for up to one hour.

         For the Government and CVS:

• Dr. Alan Fotvin, who may testify for up to one hour.
• Terri Swanson, who may testily for up to one hour.
• Dr. Lawrence Wu, who may testify for up to two hours.

         Finally, with respect to the procedures the Court will follow during the hearing, it is worth stressing, at the outset, that this hearing is not a trial. The Court is simply exercising powers that are expressly granted in the Tunney Act, see 15 U.S.C. § 16(1), to ensure that its public interest determination will be well and accurately informed. 'The Government will not be required to offer evidentiary proof of the allegations in its complaint or, for that matter, any evidence at all. Witnesses will not be subject to cross-examination. Only the attorney conducting the examination and the Court may ask the witnesses questions. There will be no opening or closing arguments, though the Court will undoubtedly hear attorney arguments at a later date. In short, this hearing is merely an opportunity for the parties and the ainici to provide the Court with whatever additional information and analysis they believe will aid the Court in determining whether the Government's proposed final judgment is in the public interest.[1]

         Indeed, in that regard, the Court would note that it cannot evaluate the public interest, in this case, without evaluating the Government's divestiture remedy. And, to say the least, an understanding of how participants in markets for individual prescription drug plans (L'PDIV) are affected by markets for pharmacy benefit management ("PBM") services would appear to be essential to that evaluation. See, e.g., PL's Resp. to Pub. Comments on Prop. Final J. at 26-27 [Dkt. # 56] (the Government implicitly acknowledging an interrelationship between participants in PDP and PBM markets when disputing an "argu[mentj that the divestiture will fail because WellCare will be foreclosed from pharmacy and PBM services"). The fact that the possible impact on the PBM services market is not mentioned in the four corners of the complaint is, of course, not dispositive of its relevance to the Court's analysis. Our Circuit Court has recognized that Tunney Act review is not, in all cases, strictly cabined by the text of the complaint or proposed judgment: Courts are "not obliged to accept [a consent decree] that, on its face and even after government explanation, appears to make a mockery of judicial power," and "if third parties contend that they would be positively injured by the decree, a district judge might well hesitate before assuming that the decree is appropriate." United States v. Microsoft Corp., 56 F.3d 1448, 1462 (D.C. Cir. 1995). Indeed, even if analysis of PBM markets was not so intertwined with evaluating the Government's proposed remedy, the Court could still hear from these witnesses before deciding whether the Government's proposed final judgment makes a mockery of judicial power or affirmatively harms third parties. See 15 U.S.C. § 16(f).

         In the final analysis, the Tunney Act mandates that courts consider "the impact of entry of [a proposed] judgment. . . upon the public generally and individuals alleging specific injury from the violations set forth in the complaint." 15 U.S.C. § 16(e)(1)(B) (emphasis added). Amici have persuasively argued, in effect, that an assessment o[ the proposed judgment on the public interest must take into account, among other things, the ways the divestiture remedy may he affected ...


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