Judge requests CVS, Aetna keep some operations separate during antitrust review

A federal judge asked CVS Health and Aetna to ensure some of their operations remained distinct while he continues a review of the companies' merger, according to The New York Times.

Here are five things to know:

1. On Dec. 18, Judge Richard J. Leon of the U.S. District Court in the District of Columbia proposed assigning a government monitor to make sure the companies took steps to "preserve the ability to unwind CVS' acquisition of Aetna in the event an unwinding is necessary."

2. CVS Health completed its $70 billion acquisition of Aetna Nov. 28, in a move the companies said will "make a complicated system simpler for all." In October, CVS entered into an agreement with the Department of Justice to move forward with the acquisition, as long as Aetna agreed to sell its standalone Medicare Part D prescription drug plans to Tampa, Fla.-based WellCare Health Plans. WellCare is set to assume control of the 2.2 million-member business Dec. 31.

3. During the Dec. 18 hearing, Mr. Leon re-emphasized his concerns with the Justice Department's antitrust review. He told government lawyers their conduct had been "tone deaf" and "unnecessarily defensive," according to The New York Times. Mr. Leon added he needed more time to review public comment, including that from the American Medical Association, on the settlement.

4. Lawyers for CVS and Aetna agreed to operate Aetna's health insurance business separate from CVS. Aetna will maintain control over what it sells and how it prices products, and the payer's employees will retain their compensation and benefits. CVS said it will keep up a firewall so competitively sensitive information is not exchanged between the two companies. The companies also said they would respond to Mr. Leon's request for government monitoring in a few days.

5. The lengths to which Mr. Leon can go to block the merger rests on how the Tunney Act is interpreted. The Tunney Act is a federal law requiring the Justice Department to get a federal court's approval for merger settlements. The Justice Department said the Tunney Act doesn't require the department to review parts of a merger it didn't find concerning, according to The New York Times.

For the full report, click here.

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