CVS-Aetna Hearing Begins: What to Expect

Three witnesses plan to testify against the megamerger, and three plan to testify in favor, but there will be no cross-examination allowed.

Six witnesses are slated to testify in a highly unusual hearing beginning Tuesday morning in a D.C. federal courtroom, where Judge Richard Leon is mulling whether to sign off on the U.S. Department of Justice's approval of CVS Health's Aetna acquisition.

The nearly $70 billion transaction closed last fall, but Leon has been thoroughly scrutinizing the DOJ-approved deal, which is why he called for this week's hearing. Three witnesses plan to testify against the megamerger, and three plan to testify in favor, but there will be no cross-examination allowed and no formal evidence required. This isn't a trial; it's merely an opportunity for Leon to gather additional perspective on the acquisition as part of his Tunney Act review process.

The DOJ objected, however, to Leon's approach, saying the hearing's format "violates fundamental principles of procedural fairness." Leon declined last week to modify the proceedings.

The hearings will last up to three days, with three witnesses put forward by amici curiae expected to speak first, followed by three witnesses put forward by CVS and the DOJ:

Neeraj Sood, PhD, a health policy professor and vice dean for research at the University of Southern California Sol Price School of Public Policy, was put forward by the American Medical Association. Sood is listed first on the amici's order of witnesses and may testify for up to two hours. Sood is expected to testify that the divestiture of Aetna's Part D plans "will not even come close to restoring competition to premerger levels," according to the AMA.
Michael B. Wohlfeiler, MD, JD, chief medical officer for the AIDS healthcare Foundation, was put forward by the foundation. Wohlfeiler is listed second on the amici's order of witnesses and may testify for up to one hour. Wohlfeiler is expected to testify on how rising healthcare consolidation has negatively impacted HIV/AIDS care.
Diana L. Moss, PhD, president of the nonprofit American Antitrust Institute and an adjunct faculty member in the Department of Economics at the University of Colorado at Boulder, was put forward by Consumer Action and the U.S. Public Interest Research Group (PIRG). Moss is listed third on the amici's order of witnesses and may testify for up to one hour. Moss is expected to testify that the merger could give CVS-Aetna incentive "to exclude rivals and facilitate anticompetitive coordination among health insurers" served by the pharmacy benefit manager CVS-Caremark, according to groups who proposed that she testify.
Lawrence Wu, PhD, president of the economic consulting firm NERA, was put forward by CVS. Wu is listed first on the parties' order of witnesses and may testify for up to two hours. Wu is expected to testify that the CVS-Aetna transaction won't lead to price increases for consumers.
Alan Lotvin, executive vice president of transformation for CVS Health, who reports directly to CVS President and CEO Larry Merlo, was put forward by his employer. Lotvin is listed second on the parties' order of witnesses and may testify for up to one hour. Lotvin plans to testify on purported consumer benefits of the CVS-Aetna deal.
Terri Swanson, vice president of Medicare product and Part D business at Aetna since 2010, was put forward by both CVS and the DOJ. Swanson is listed third on the parties' order of witnesses and may testify for up to one hour.

The scrutiny of CVS-Aetna's PBM business comes as policymakers in D.C. explore their options on the possibility of new laws and regulations to rein in healthcare middlemen.

Steven Porter is an associate content manager and Strategy editor for HealthLeaders, a Simplify Compliance brand.