UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

UNITED STATES OF AMERICA, et al.,_ )
)
Plaintiffs, )
)
v. ) Civil Case No. 18-2340 (RJL)

)
CVS HEALTH CORPORATION, etal, )
)

Defendants. ) F I L E D

MAY 13 2019

MEMORANDUM ORDER Clerk, U.S. District & Bankruptcy

Courts for the District of Columbia

 

May ZF , 2019

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 amici curiae participating in this matter to
present one or more witnesses at a future hearing regarding the proposed final
judgment. As such, I 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 amici:
e Dr. Neeraj Sood, who may testify for up to two hours.
e Dr. Diana L. Moss, who may testify for up to one hour.

e Dr. Michael B. Wohlfeiler, who may testify for up to one hour.

For the Government and CVS:

 

e Dr. Alan Lotvin, who may testify for up to one hour.
e ‘Terri Swanson, who may testify for up to one hour,

e Dr. Lawrence Wu, who may testify for up to two hours.
Finally, with respect to the procedures the Court wil! 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(f), 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 amici 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.!

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 (“PDPs”) 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

 

' Because the hearing is simply an opportunity to provide the Court with additional information,
and because the witnesses will not be subject to cross-examination, the parties are not required to
exchange expert reports in advance of the hearing.
[Dkt. #56] (the Government implicitly acknowledging an_ interrelationship

6

between participants in PDP and PBM markets when disputing an “argu[ment|
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 eeidine 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 of the proposed judgment on the public interest must
take into account, among other things, the ways the divestiture remedy may be
affected by PBM markets. The Court will, therefore, hear testimony that concerns,
in part, the impact of the merger on PBM markets,

Accordingly, for the foregoing reasons, it is hereby ORDERED that CVS’s
Motion to Exclude [Dkt. #81] and the Government’s Motion to Limit the Scope
of the Tunney Act Hearing and Exclude Irrelevant and Undisclosed ‘Testimony
[Dkt. # 82] are DENIED.

It is further ORDERED that the Government’s Motion to Treat Filings as
Part of the LEvidentiary Record in the Tunney Act Hearing [Dkt. #73] 1s
GRANTED. The Tunney Act provides that a district court may consider and rely
on information filed with the court when making its public interest determination,
See, eg., 15 U.S.C. § 16(1)(4). The Court will consider the complaint, proposed
final judgment, competitive impact statement, explanation of consent decree
procedures, and response to public comments filed in this matter as part of the
record on which it determines whether the Government’s proposed final judgment
is in the public interest.

It is further ORDERED that the Government’s Motion to Clarify
Procedures for the Tunney Act Hearing [Dkt. # 86] is DENIED as moot. This
Memorandum Order clarifies the scope of, and procedures for, the upcoming

hearing.
It is further ORDERED that three days will be set aside for the hearing,
during which the Court will hear from the witnesses named in this Memorandum
Order. See supra p. 2. The hearing shall commence at 10:30 am on June 4, 2019,
in Courtroom 18. The hearing shall finish each day no later than 5:30 pm and

conclude no later than 5:30 pm on June 6, 2019.

SO ORDERED.

  

United Statesustrict Judge
