CVS Sues Former Top Exec Over Potentially Taking Trade Secrets to Competitor
GoLocalProv News Team
CVS Sues Former Top Exec Over Potentially Taking Trade Secrets to Competitor
On February 9, CVS Pharmacy sued Timothy Brown, a “high compensated Chief Medicare Officer” of Aetna, who announced in January he was leaving to take a position with Cigna.
CVS and Aetna had merged in 2018, making CVS at the time the second largest company by revenue in America.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTIn 2020, total revenues increased 32.0% to $256.8 billion
“After participating in Aetna’s annual process of developing its strategy for the 2022 Medicare Advantage plan year, Brown seeks to join Aetna’s direct competitor, Cigna, in a role where he will be directly responsible for growth of Cigna’s share of the national Medicare Advantage market and expansion of Cigna’s footprint,” according to the lawsuit.
“Utilizing Brown’s inside knowledge of Aetna’s vulnerabilities and growth plans, Cigna dan deploy its resources to unfairly capture market share directly from Aetna,” it goes on to add.
Aetna's integration is critical to CVS.
“As we work to transform the way health care is delivered to millions of Americans, we are driving continued business performance and generating positive momentum across the enterprise. Our fourth quarter and full-year financial results reflect strong financial and operational execution and a successful first year of integrating the Aetna business. We’re using our unmatched capabilities to create a higher-quality, simpler and more affordable health care experience, which benefits patients, clients and consumers and positions the company for continued success,” said President and Chief Executive Officer Larry Merlo in reporting the 2020 financials.
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When the United States Department of Justice approved the CVS-Aetna merger in 2018, the agency touted the benefits.
“[It will] allow for the creation of an integrated pharmacy and health benefits company that has the potential to generate benefits by improving the quality and lowering the costs of the healthcare services that American consumers can obtain,” said Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division in the press release at the time.
Now, CVS is facing increased competition not just on the benefits side — in November, Amazon announced it was launching its own pharmacy business.
In its lawsuit, CVS is seeking to prohibit Brown from working at Cigna for twelve months, after he left Aetna in January 2021.
“Before he resigned from Aetna in late January 2021, Brown learned Aetna’s strategies for formulating and selling its 2022 Medicare Advantage plans,” states the lawsuit. “With his knowledge of Aetna’s market expansion strategy, products, and competitive positioning, Brown could do significant completive damage to Aetna.”
The lawsuit goes on to state that Brown was in “receipt and use of confidential information including trade secrets related to national product, vendor, and contract strategy; sales and business performance metrics; [and] Aetna’s national medicare business.”
CVS said they tried to negotiate the terms of Brown’s departure, but did not achieve the terms they had sought.
“Aetna has attempted to negotiate with Brown and Cigna to achieve an accommodation that would permit Brown to work in Cigna’s Medicare business while adequately protecting Aetna’s legitimate business interest,” according to the lawsuit. “However, Cigna and Brown have insisted that he be permitted to occupy a national Medicare Advantage position…where it is inevitable that Brown would use Aetna’s Confidential Information I such a role, Aetna has been left with no alternative other than to seek relief requested from the court.”
CVS is suing Brown, who lives in Washington state, for breach of contract and misappropriation of trades secrets — and is seeking “damages to be determined at trial.”
“We have no comment beyond what is already conveyed in the suit,” said Mike DeAngelis in CVS Health Corporate Communications when reached by GoLocal.
Cigna did respond to request for comment.