In what would be a highly unconventional move, D.C. Circuit Judge Richard Leon has indicated he might block the deal that Department of Justice approved in the fall.
CVS and Aetna have already been functioning as one merged company for some months now, following the Department of Justice’s approval of the merger.
But an old antitrust law -- and a judge who appears to have concerns about the department’s handling of the merger -- might foil the deal. The Tunney Act stipulates that the D.C. Circuit Court can review the DOJ’s handing of antitrust cases. Usually, the court simply approves the department’s decision. That’s why Leon’s scrutiny of the merger has been so unorthodox.
During hearings last week, Leon told lawyers that they might want to cancel their summer plans ahead of oral arguments in mid-July and a ruling from Leon sometime after that.
CVS’s stock has tumbled 2.5% since the markets opened on Tuesday. CVS, which has its headquarters in Woonsocket, didn’t respond to a request for comment.
Consumer groups have criticized the deal, saying it would create a mega-entity that would hurt competition. CVS and Aetna maintain they can provide more efficient care in more locations.
Amanda Starc, a healthcare economist at the Kellogg School of Management at Northwestern University, says the deal could reduce competition and raise prices for consumers. But it also could give Aetna good reason to make prescription drugs more affordable.
“You might like it if the person who’s paying for your medical bills is also the person paying for your drug bills,” Starc said. “Why would you like that? Well, then they have all the right incentive to keep you healthy, because if they spend a little more making sure you take your prescription drugs so you don’t end up in the hospital, they get to keep that savings.”