U.S. District Court Judge Richard Leon expressed concerns that he was being used as a “rubber stamp” and that the DOJ was only raising “anti-competitive concerns about one-tenth of one percent of this $69 billion deal.” On Monday, December 3, Judge Leon delayed final approval the merger for at least a couple more weeks and another hearing is set for Dec. 18. AAPS is taking this opportunity to reemphasize concerns raised earlier in the process along with new issues related to the merger.
Chief, Healthcare and Consumer Products Section,
Department of Justice,
450 Fifth Street NW, Suite 4100,
Washington, DC 20530
December 5, 2018
Dear Mr. Mucchetti,
We are writing today in opposition to the proposed settlement of U.S. v CVS and Aetna that would allow the merger to proceed. The DOJ noted that it would be accepting comments on this matter submitted by December 17, 2018.
AAPS remains concerned for patients despite the Department of Justice Antitrust Division’s determination that the CVS-Aetna merger would not present horizontal or vertical competition concerns other than the Part D plan (PDP) overlap. We disagree with this finding.
The settlement does not address harm to patients resulting from
vertical consolidation that will occur between a merger of an insurer, pharmacy
benefits manager, and providers of medical care and prescriptions.
As outlined in our letter to the DOJ objecting to the merger, primary care physicians are at risk of being squeezed out of the marketplace to the detriment of patients. http://aapsonline.org/cvs-aetna/
The DOJ itself notes the benefits competition has brought “[C]ompetition between [CVS and Aetna’s PDPs] has led not only to lower premiums and out-of-pocket expenses but also improved drug formularies, more attractive pharmacy networks, enhanced benefits, and innovative product features.” (Competitive Impact Statement, pg. 5, line 2-5).
We would argue that the same concerns the DOJ expresses regarding harm to competition in the Part D plan market still exist in the market for primary care services. The DOJ states:
Neither entry nor
expansion is likely to solve the competitive problems created by the merger
between CVS and Aetna. Recent entrants into individual PDP markets have been
largely unsuccessful, with many subsequently exiting the market or shrinking
their geographic footprint. Effective entry into the sale of individual PDPs
requires years of planning, millions of dollars, access to qualified personnel,
and competitive contracts with retail pharmacies and pharmaceutical
and companies must establish sufficient scale quickly to keep their plans’ costs down. (Competitive Impact Statement, pg. 6, line 13-18).
Physicians attempting to open a neighborhood private practice or small
pharmacies will not have the “millions of dollars” available to CVS. CVS is in
the position to steer patients covered by Aetna to receive their care from
CVS-run clinics, instead of from their own trusted physician. Moreover, the
patients in the name of convenience or coerced by a limited network would get
their prescriptions from CVS.
The merger boasts price, access, choice, and convenience. The choice is the CVS store on Main Street or Market Street. Statements by CVS CEO Larry Merlo indicate a combined CVS-Aetna would indeed execute strategies, like the ones we outlined in our earlier letter, that restrict patient options and push patients to get their care at CVS Minute Clinics, not their family doctor’s office. “Perhaps 20 percent of the retail space could be repurposed to expand Minute Clinics.… [I]t could mean more pharmacists practicing at the top of their licenses.” stated Mr. Merlo.
Studies consistently find that patients overwhelmingly want “personalized provider interactions.” and want time to discuss personal issues other than physical symptoms and medications. While we strongly believe healthcare is an active participant in free market principles, it is difficult to imagine discussing end-of-life issues with a “provider” at the drugstore.
Our patients will see higher insurance premiums, lower quality, and fewer novel insurance products that meet their specific needs. This merger will unquestionably result in patient enrolled in plans managed by Aetna being steered toward CVS products and away from competitors’ offerings.
CVS is already on the forefront of limiting patient choice when it comes to where they purchase their prescriptions. According to industry analysts writing for DrugChannels.com:
Maintenance Choice program is the most prominent limited network model for
commercial plan sponsors. For 2016, 25 million covered lives were enrolled in
the program, up from 23 million in 2015. … Under the program, a beneficiary can
obtain maintenance medications from either a CVS retail pharmacy or a CVS
Caremark mail pharmacy. This model lets consumers choose the pharmacy channel
(mail or retail) but limits the choice to CVS Health dispensing channels. https://www.drugchannels.net/2017/01/yes-commercial-payers-are-adopting.html
Given the track record of CVS in limiting patient choice, it is inconceivable that it will not use the merger with Aetna to move more patients (known to CVS/Aetna as “enrolled lives”) into its restricted pharmacy networks. And CVS makes the most of its captive consumers by charging the highest prices for drugs. Earlier this year, Consumer Reports compared the prices of five standard prescriptions and found they cost a combined $66 at an online pharmacy, $105 at Costco, while the bill at CVS was $900. Meanwhile at an independent physician’s office in a state allowing in-office dispensing, a patient can bypass the middlemen and get the same drugs for a total of $29. https://www.consumerreports.org/health-insurance/how-big-healthcare-mergers-like-cvs-and-aetna-could-affect-you/
We ask the court and DOJ to take a closer look at how the above practices might be in violation of antitrust statutes before allowing the merger to proceed. Forcing patients to shop at the highest priced pharmacy seems to us to be antithetical to principles of robust competition. One might argue that CVS would reduce prices for Aetna enrollees in order to lower costs for the insurer. But in an environment with soaring out-of-pocket cost sharing, the increased prices would more likely fall to patients through increased co-payments and premiums, not to the plan. Higher prices therefore would result in greater cash flow to a combined CVS-Aetna, without any corresponding increase in actual benefit to their customers.
We also ask that the DOJ and the court consider anti-competitive actions a combined CVS-Atena might take to steer patients covered by Aetna to care at CVS Minute Clinics and away from competitors, such as the independent physicians patients might otherwise prefer. The DOJ and court should also consider the impact to competition for ancillary items and other medical products, patients might be encouraged to buy in conjunction with care provided at CVS-Aetna owned facilities.
Finally, a merger should not proceed while there is an ongoing federal whistleblower case, Behnke vs. CVS Caremark, alleging CVS violated federal laws while under contract with Aetna to administer Part D plans. Shockingly, Aetna recently suspended the whistleblower who brought these claims against CVS to light, claims that include a complex scheme for rigging payments to pharmacies in an anti-competitive manner. A merger prior to the resolution of these allegations could improperly allow CVS to influence Aetna’s cooperation with this investigation, to the extent that it hasn’t already done so.
In conclusion, we ask the DOJ and the U.S. District Court to consider the above factors that demonstrate approval of the proposed settlement will result in less competition, fewer options, harm to patients’ pocketbooks, and ultimately their health.
Marilyn M. Singleton, M.D., J.D.,
President, Association of American Physicians and Surgeons
cc Judge Richard Leon