# FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 10/24/2024 OSCAR NO 612030 | PAGE Page 1 of 31 * -PUBLIC

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/agency%3Aftc%3Ad0c5a50a97d929b2

## Record

- **Collection:** Agency decision
- **Document type:** Agency decision

## Text

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UNITED STATES OF AMERICA
BEFORE THE FEDERAL TRADE COMMISSION

IN THE MATTER OF:
SUBPOENA AD TESTIFICANDUM File No. 241-0005
ISSUED TO CVS HEALTH CORPORATION

CVS HEALTH CORPORATION’S PETITION TO QUASH
SUBPOENA AD TESTIFICANDUM

Pursuant to 16 C.F.R. § 2.10(a), Petitioner CVS Health Corporation (“CVS”) requests that
the Federal Trade Commission (“FTC” or “Commission’’) quash the Subpoena Ad Testificandum
issued to CVS on October 16, 2024 (the “Subpoena,” attached as Exhibit 1) regarding CVS’s
enormous efforts to comply with a December 8, 2023 FTC Civil Investigative Demand
(“December CID”). The Subpoena is the latest salvo in the Commission’s misguided and
misinformed crusade against CVS’s pharmacy benefit management (“PBM”) business to achieve
an outcome that the three majority Commissioners prejudged repeatedly over the past three years.!

The underlying suggestion of the Subpoena that CVS has not undertaken substantial efforts
to comply is not credible. Since June 2022, CVS has received and responded to hundreds of
requests across fourteen different FTC subpoenas, civil investigative demands (“CIDs’’), and 6(b)
orders. In response, CVS has produced to the FTC more than 13 million pages, nearly 2 million
documents, and several terabytes of data. For the December CID in particular, CVS has produced

more than 1.2 million documents across more than 6 million pages requiring more than 180,000

1 CVS intends to file in short order a motion to disqualify Chair Khan, Commissioner Slaughter, and Commissioner
Bedoya from the underlying investigation, FTC Matter No. 241-0005, based on their prior prejudicial and biased
statements and actions. This motion would be in addition to the pending motion for disqualification filed on October
8, 2024, by Caremark Rx, L.L.C. and Zinc Health Services, LLC in the insulin proceedings, FTC Docket No. 9437.
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hours of work by CVS’s e-discovery vendor alone. These statistics could not be achieved through
anything other than a substantial commitment of resources by CVS.

The Subpoena is not reasonably relevant to the underlying investigation, is unduly
burdensome, was issued for the improper purpose of harassing CVS, and impermissibly seeks
privileged information. The Commission should therefore quash the Subpoena.

BACKGROUND AND PROCEDURAL HISTORY?

Since June 2022, CVS has worked cooperatively with dozens of FTC attorneys throughout
the agency. These attorneys were part of a disconcerted FTC effort to simultaneously “study” and
“investigate” the PBM industry, with the first investigations beginning at the same time as the
purported study. Over the past 28 months, the FTC has issued to CVS-affiliated entities fourteen
different subpoenas, civil investigative demands, and 6(b) study orders related to PBMs. In total
across all requests, the FTC has made more than 500 requests (including subparts) and met with
CVS dozens of times.

CVS has invested substantial time, money, and resources in working with several different
teams within the FTC in parallel. These FTC teams typically did not appear to coordinate closely
among each other and treated each request to CVS as if it was entirely independent of requests
made by colleagues down their hallway. In total, CVS has produced more than 1.7 million
documents spanning 13.3 million pages, and 6 terabytes of data covering more than 9 billion
prescriptions and thousands of pharmacy networks. More than 150 CVS employees have been
pulled away from their day jobs to assist with the company’s compliance with FTC compulsory

process. CVS retained outside legal counsel at Dechert LLP to oversee the company’s compliance,

2 The Declaration of Michael Chase on Behalf of CVS Health Corporation attached as Exhibit 2 includes additional
information on the facts described in this section.
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an e-discovery vendor to manage document collection, processing, review, and production, and an
outside economic consulting firm to manage the collection, compilation, and production of
massive amounts of data to respond to FTC requests. For the document processes alone, the
voluminous FTC requests required more than 200,000 hours of work by the e-discovery vendor.
CVS has worked with dozens of different FTC attorneys over the past three years on these matters.

The latest of these matters is the FTC’s October 16, 2024 Subpoena, which seeks
information on CVS’s efforts to comply with the December CID. The December CID sought
substantial amounts of information that CVS had or would be producing to the FTC as part of the
6(b) order issued on June 6, 2022. The FTC did not attempt to tailor the 6(b) requests in a
reasonable manner that would have substantially streamlined and expedited completion of the
productions needed for the study. As a result, the FTC required CVS to produce more than 1
million documents spanning more than 6 million pages along with more than 5 terabytes of data—
of which only a miniscule portion was ultimately used in the FTC’s Interim Report issued on July
9, 2024. CVS met with the FTC on a weekly basis between February 2023 and October 2023, then
biweekly since then, for a total of more than 50 meetings. Due to CVS’s immense effort to comply
with the 6(b) order, CVS completed its responsive data productions in February 2024 and its
document productions in May 2024 (with the exception of a small number of documents).
Nevertheless, the FTC issued its Intertm Report in July 2024 and suggested that the lack of
analytical rigor in the report was supposedly the result of not having sufficient information.
Criticism of the FTC’s Interim Report has been unprecedented for an FTC 6(b) study, with multiple
independent experts and two FTC Commissioners panning the report as lacking sufficient

empirical data and analytical rigor to form any meaningful conclusions.’

3 See, e.g., Drug Channels Roundup (July 30, 2024) (Adam Fein, President, Drug Channels Institute: “The plural of
anecdote is data. And in my opinion, the FTC didn't pile up enough anecdotes to generate sufficient data .. . These

3
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After the FTC issued the December CID, a new team of FTC attorneys was directed to
work with CVS on the investigation. Given the enormous amount of information various FTC
teams had already received from CVS, the company requested that the new team review the
substantial materials that CVS had already produced to the FTC—several million pages, terabytes
of data, and many interrogatory responses—to identify what was “still needed that [was] not
already covered or known to the FTC through the other five CIDs and 6(b) orders.” Starting on
January 8, 2024, CVS began rolling in its first set of responsive materials for the December CID.
CVS submitted responsive materials to Specifications 5, 25(b), 26, 32, and 40 in January 2024;
Specifications 1, 2, 3, 4, 16, 17, and 18 in February 2024; Specifications 8, 25, 32, 34, and 35 in
March 2024; sample data for Specifications 13, 14, and 15 in August 2024; and Specifications 9,
10, 11, 12, 34, and 35 in September 2024. The remaining specifications largely represented
requests for custodial documents, of which the FTC had already received more than 1.2 million as
of May 2024; certain data, of which the FTC had already received more than 5 terabytes as of
February 2024; certain interrogatories that by their nature will be completed when compliance
with the December CID is complete; and refreshes of certain data or documents.

Regarding custodial documents, CVS submitted on February 2, 2024, a proposed list of
document custodians and search terms to comply with the December CID. The FTC responded to
these proposals on March 28, 2024, with counterproposals. Following multiple meetings and

additional counterproposals by each side, CVS and the FTC had agreed on nearly all custodians

omissions should be noticeable to anyone with some economics training. If the FTC ever publishes a final report, I
hope it includes a more comprehensive, data-based economic analysis of the PBM market[].”); K. Adams,
Marketplace, Why the FTC Is Looking at PBMs and Their Role in Drug Pricing (July 11, 2024) (Ge Bai, John Hopkins
Professor: “I do not believe the report has evidence showing PBMs harmed patients and plan sponsors.”); Comm’r
Holyoak Dissenting Statement (July 9, 2024) (“The standard of these reports has been nothing short of excellence. . .
. But today’s Report fails to meet that rigorous standard.”); Comm’r Ferguson Concurring Statement (July 9, 2024)
(The Report “relies, throughout, in large part on public information that was not collected from the PBMs or their
affiliates during the 6(b) process. . .. But public comments are rather beside the point of the 6(b) study.”).
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as of early May 2024. On May 6, 2024, CVS began the process of collecting documents from
agreed-upon custodians that had not previously been gathered or produced. On May 31, 2024,
CVS and the FTC began to finalize an agreement on custodians, which the FTC confirmed by
letter on June 11, 2024. Over the weeks that followed, CVS and the FTC engaged in good faith
negotiations to finalize a list of search terms, with the parties reaching a final agreement by the
beginning of August 2024. With the search terms finalized, CVS began its review of custodial
documents and made its first rolling custodial document production on September 23, 2024.

CVS has met with the FTC multiple times to keep the FTC informed as to the status of its
compliance. On August 26, 2024, based on these discussions, the FTC proposed a timeline that
would have CVS complete its productions for the December CID by January 31, 2025. By mid-
September, CVS had collected the bulk of the custodial documents potentially responsive to the
December CID and loaded for review several hundreds of thousands of documents using the
agreed upon search terms. Based on this massive volume, on September 26, 2024, CVS provided
the FTC with an estimated timeline of when it expected to complete the remaining portions of the
December CID response. CVS informed the FTC that, given the volume of documents and data,
CVS expected compliance with the December CID to be completed by February 28, 2025—only
about one month later than the final January 31, 2025 date in the FTC’s proposal.

Without any further engagement, the FTC on October 16, 2024, issued a subpoena to CVS
for testimony regarding efforts undertaken to comply with the December CID. CVS’s outside
counsel at Dechert LLP met with the FTC on October 21, 2024, to discuss the Subpoena and after
that meeting notified the FTC that it planned to file a petition to quash on October 24, 2024.

As of October 24, 2024, CVS had produced to the FTC more than 6.2 million pages across

more than 1.2 million documents and approximately 5.8 terabytes of data in response to the
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December CID and the related June 6, 2022 6(b) order. More than 100 CVS employees assisted
with compliance efforts. CVS’s outside e-discovery vendor worked more than 180,000 hours,
including more than 24,000 hours since December 8, 2023, to comply with the FTC’s December
CID requests. All the while, CVS continued to comply with many other requests from the FTC on
related but separate matters managed by different teams within the FTC.

ARGUMENT

The FTC’s “[s]ubpoena enforcement power is not limitless.” FTC v. Ken Roberts Co., 276
F.3d 583, 586 (D.C. Cir. 2001). As the Supreme Court has warned, “governmental investigation
into corporate matters may be of such a sweeping nature and so unrelated to the matter properly
under inquiry as to exceed the investigatory power.” United States v. Morton Salt Co., 338 U.S.
632, 652 (1950). Administrative subpoenas must be “sufficiently limited in scope, relevant in
purpose, and specific in directive so that compliance will not be unreasonably burdensome.” See
v. Seattle, 387 U.S. 541, 544 (1967).

The Commission should quash the Subpoena for four independent reasons. First, the
information sought by the Subpoena is not reasonably relevant to the FTC’s investigation of CVS’s
pharmacy contracting practices. Given CVS’s substantial production of responsive information
during the investigation, the Subpoena’s request for testimony regarding CVS’s response is
excessive and unreasonable. Second, the Subpoena is unduly burdensome. The FTC already has
in its possession certain of the information sought by the Subpoena, while the probative value of
the remaining information sought by the Subpoena is substantially outweighed by the burden of
complying therewith. Third, the Subpoena was issued for the improper purpose of harassing

CVS—not to determine whether CVS has violated the FTC Act. Fourth, the Subpoena
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impermissibly seeks information protected by the attorney-client and attorney work product
privileges.

I. The Information Sought by the Subpoena Is Not Reasonably Relevant to the FTC’s
Investigation

To be enforceable, a subpoena must be reasonable in the “nature, purposes, and scope of
the inquiry.” Oklahoma Press Publ’g Co. v. Walling, 327 U.S. 186, 209 (1946). A subpoena is not
enforceable if it is not “reasonably relevant” to a legitimate purpose. Morton Salt, 338 U.S. at 652-
53; see also FTC v. Anderson, 631 F.2d 741, 745 (D.C. Cir. 1979) (“The test for the relevancy of
an administrative subpoena . . . is whether the information sought is ‘reasonably relevant’ to the
agency’s inquiry.”); FTC v. Turner, 609 F.2d 743, 746 (Sth Cir. 1980) (denying enforcement of
FTC subpoena where information sought was not reasonably relevant to authorized FTC inquiry).

As explained by the D.C. Circuit Court of Appeals, reasonableness is the touchstone for
assessing whether an agency subpoena is sufficiently relevant to the agency’s inquiry: “[T]he gist
of the protection is in the requirement . . . that the disclosure sought shall not be unreasonable.
Correspondingly, the need for moderation in the subpoena’s call is a matter of reasonableness.”
SEC v. Arthur Young & Co., 584 F.2d 1018, 1030 (D.C. Cir. 1978). “The requirement of
reasonableness . . . comes down to [whether the] specification of the documents to be produced
[is] adequate, but not excessive, for the purposes of the relevant inquiry.” Jd. (quoting Walling, 327
US. at 209).

The FTC’s Subpoena seeking an investigational hearing regarding CVS’s efforts to
respond to the December CID in the underlying investigation is excessive and thus fails this test
of reasonableness. CVS has produced a substantial amount of information responsive to the
December CID. In doing so, CVS has incurred significant expenses and devoted a substantial

amount of its employees’ time to such response. To date, more than 100 CVS employees have
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assisted with complying with the December CID. Chase Decl. § 53. CVS’s outside e-discovery
vendor has spent more than 180,000 hours collecting, reviewing, and preparing document
productions related to this matter, including more than 24,000 hours since December 8, 2023. Id.
As a result of these efforts, CVS has produced more than 6.2 million pages across more than 1.2
million documents and approximately 5.8 terabytes of data. Id. CVS’s efforts to respond to the
December CID are continuing to this day. Id. { 54.

Under these circumstances, it is not reasonable for Commission staff to pursue an
investigational hearing to assess the “[r]esources allocated and efforts undertaken” to respond to
the December CID in the underlying investigation. Subpoena, Att. A at 1 (topics 1.a and 1.b).

Further, CVS has produced to the FTC complete document retention policies on at least
four occasions in PBM-related matters, including the underlying investigation, between September
2022 and January 2024. Chase Decl. 4 57. The policies identify the document retention periods for
each category of documents maintained by CVS. /d. It is therefore unreasonable for Commission
staff to pursue an investigational hearing to assess CVS’s “policies and procedures relating to the
retention and destruction of documents and data.” Subpoena, Att. A at 1 (topic 2).

II. The Subpoena Is Unduly Burdensome Because the Burden of Complying Outweighs
the Need for and the Probative Value of the Information Sought

The FTC exceeds its investigative power where it seeks information that is “unduly
burdensome or unreasonably broad.” F'TC v. Texaco, Inc., 555 F.2d 862, 882 (D.C. Cir. 1977). An
administrative subpoena is unreasonable when the burden of compliance outweighs the agency’s
need for the information or the probative value of the information sought. Dow Chem. Co. v. Allen,
672 F.2d 1262, 1270 (7th Cir. 1982) (affirming district court’s denial of enforcement of
administrative subpoena). An administrative subpoena is also improper when the information

sought is already within the agency’s possession. See In re Civil Investigative Demand 15-439,
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2016 WL 4275853, at *7 (W.D. Va. 2016) (citing United States v. Powell, 379 U.S. 48, 57-58
(1964)).

The Subpoena identifies as one of the topics for the investigational hearing “[t]he
Company’s policies and procedures relating to the retention and destruction of documents and
data.” Subpoena, Att. A at 1 (topic 2). However, as noted above, CVS has already produced its
document retention policies in effect during the relevant time period covered by the December
CID. That is, the information on document retention polices sought by the Subpoena is already
within the Commission’s possession.

The Subpoena also seeks testimony from CVS regarding its efforts to respond to the
December CID. However, given the substantial amount of documents, data, and other information
that CVS has produced to the FTC in response to the December CID discussed above, there is no
or little probative value in having a CVS representative appear at an investigational hearing to
describe those efforts. In any case, any such value would be outweighed by the burden of having
to prepare a CVS representative to answer questions during an investigational hearing regarding
the extensive, years-long effort CVS undertook to produce information responsive to the
December CID.

III. The Subpoena Was Issued for the Improper Purpose of Harassing CVS

The proper purpose for the FTC to issue a subpoena is to investigate whether the law has
been violated. Courts will quash agency demands for information that were “issued for an improper
purpose, such as to harass the [recipient] or to put pressure on [the recipient] to settle a collateral

dispute.” Powell, 379 U.S. at 58; see also FTC v. Bisaro, 2010 WL 3260042, at *6 (D.D.C. 2010)
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(granting limited discovery as to purpose of FTC subpoena and whether FTC’s enforcement
thereof amounted to an abuse of process).

The most likely conclusion one could draw from the facts and circumstances in this matter
is that the FTC’s Subpoena is designed to harass CVS. There has been no suggestion by FTC staff
that CVS has failed to maintain documents or data. Nor has there been any questions even raised
about its document retention policy or its document preservation efforts. That the Subpoena may
be motivated by harassment rather than truth seeking instead finds substantial support in the many
recent public statements by the FTC Chair and her fellow Democratic Commissioners regarding
CVS’s pharmacy benefit manager, Caremark, and other PBMs. Through numerous prejudicial and
incorrect public statements, the three Democratic Commissioners have already decided the
primary question at issue in the underlying investigation: whether Caremark and other PBMs have,
through anticompetitive conduct, forced independent pharmacies out of business. The Democratic
Commissioners have already decided that question by falsely asserting, among other things, that
PBMs like Caremark have caused independent pharmacies to “vanish[] at an alarming rate,”
“lessen[ed] competition among drugstores and pharmacies,” led to “the demise of independent
pharmacies,” used their “market dominance” to reduce patient access to prescription drugs at
pharmacies,° acted in a way that “[w]e all know . . . isn’t fair” by developing pharmacy network

options for clients looking to save money,’ “dictate[d] pricing and access to life-saving drugs” for

4L. Khan, Chair, Fed. Trade Comm’n, Remarks Regarding the 6(b) Study on Pharmacy Benefit Managers, at 3
(Feb. 17, 2022), https://www.ftc.gov/system/files/ftc_gov/pdf/p22 1200khanstatementrepbms.pdf.

>R. Slaughter, Comm’r, Fed. Trade Comm’n, Statement Regarding the Use of Compulsory Process and Issuance of
6(b) Orders to Study Contracting Practices of Pharmacy Benefit Managers, at 1 (June 7, 2022),
https://www.fic.gov/system/files/ftc_gov/pdf/P221200PBMSlaughterStatement.pdf.

©R. Slaughter, Comm’r, Fed. Trade Comm’n, Statement Regarding the FTC Staff Interim Report: Pharmacy Benefit
Managers, at 1 (Aug. 1, 2024), https://www.ftc.gov/system/files/ftc_gov/pdf/bks-statement-pbm-interim-report.pdf.

7 A. Bedoya, Comm’r, Fed. Trade Comm’n, Remarks on “Returning to Fairness” to the Midwest Forum on Fair
Markets, at 8 (Sept. 22, 2022),

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patients at pharmacies,® and chose “who’s getting access to access to certain markets, [and] who’s

3%

not getting access to certain markets,” especially in their role as “vertically integrated .. .
middlemen” that can “distort the competitive process.”? These are just a few of the many
statements made by the three Democratic Commissioners that demonstrate that they have
prejudged the outcome of the underlying investigation.!° The Subpoena was issued for the
improper purpose of harassing CVS and should be quashed.

IV. The Subpoena Impermissibly Seeks Privileged Information

“The attorney-client privilege is the oldest of the privileges for confidential
communications known to the common law.” Upjohn Co. v. United States, 449 U.S. 383, 389
(1981). Both FTC regulations, 16 C.F.R. § 2.7(a)(4), and the Federal Rules of Civil Procedure,
Fed. R. Civ. P. 26(b)(1), (3), recognize that attorney-client communications and attorney work
product can accordingly be withheld from discovery.

The Subpoena seeks testimony on “[r]esources allocated and efforts undertaken to collect,
review, and produce responsive documents and data,” as well as “[rJesources allocated and efforts
undertaken to prepare and produce narrative responses.” Subpoena, Att. A at 1 (topics 1.a and 1.b).
CVS’s responses to the document and data requests and interrogatories in the December CID were

prepared at the direction, and with the assistance, of CVS in-house and outside counsel. Inquiry

into CVS’s efforts to respond to the December CID during an investigational hearing will

https://www.fic.gov/system/files/ftc_gov/pdf/returning to fairness_prepared_remarks
_commissioner_alvaro_bedoya.pdf.

81. Khan, A. Bedoya, R. Slaughter, Fed. Trade Comm’n, Opening Statement before the U.S. House Comm. on the
Judiciary, Hearing on Oversight of the Fed. Trade Comm’n, at 2 (July, 13, 2023)
https://www.ftc.gov/system/files/ftc_gov/pdf/house-judiciary-hearing-chair-khan-oral-testimony_.pdf.

° The Heart of Healthcare: Competition and Consolidation in Healthcare, Interview of FTC Chair Lina Khan, (Oct.
3, 2024), https://podcasts.apple.com/us/podcast/the-heart-of-healthcare/id1575404727?7i=100067 1636977 &1r=396.

10 See supra note 1.

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inevitably implicate privileged attorney-client communications made, and attorney work product

created, in the process preparing such response.

At least one court has ruled that a Rule 30(b)(6) request for deposition on the topic of a

party’s responses to interrogatories and document requests was unenforceable because such

inquiry implicated attorney-client privileged communications and attorney work product. See

Smithkline Beecham Corp. v. Apotex Corp., 2000 WL 116082, at *9 (N.D. Ill. 2000). The court

found that such a “proposed area of inquiry improperly trespasses into areas of work product and

attorney-client privilege.” Id.

The Subpoena impermissibly seeks information that is protected by the attorney-client and

attorney work product privileges. As a result, the Commission should quash the Subpoena.

CONCLUSION

For the reasons set forth above, CVS respectfully requests that the Commission quash the

Subpoena.

Dated: October 24, 2024

12

Respectfully Submitted,

/s/ Mike Cowie

Michael Cowie

Rani Habash

Gregory Luib

Dechert LLP

1900 K Street NW

Washington, DC 20006

Email: mike.cowie@dechert.com

Email: rani.habash@dechert.com

Email: gregory.luib@dechert.com
Tel: (202) 261-3300

Counsel for CVS Health Corporation
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UNITED STATES OF AMERICA
BEFORE THE FEDERAL TRADE COMMISSION

IN THE MATTER OF:
SUBPOENA AD TESTIFICANDUM File No. 241-0005
ISSUED TO CVS HEALTH CORPORATION

STATEMENT OF COMPLIANCE WITH 16 C.F.R. § 2.10(a)(2)

Pursuant to 16 C.F.R. § 2.10(a)(2), Mike Cowie and Rani Habash from Dechert LLP met
and conferred in good faith with FTC attorneys Randall Weinsten and Logan Wilke on October
21, 2024 at 1:30pm via Microsoft Teams. The parties were unable to reach a resolution on the
issues raised by the Subpoena Ad Testificandum dated October 16, 2024. Dechert notified
Commission Counsel, including Mr. Weinsten and Mr. Wilke, that CVS Health planned to file a

Petition to Quash on October 24, 2024.

Dated: October 24, 2024 Respectfully Submitted,

/s/ Mike Cowie

Michael Cowie

Rani Habash

Gregory Luib

Dechert LLP

1900 K Street NW

Washington, DC 20006

Email: mike.cowie@dechert.com

Email: rani.habash@dechert.com

Email: gregory.luib@dechert.com
Tel: (202) 261-3300

Counsel for CVS Health Corporation

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Exhibit 1
SUBPOENA AD TESTIFICANDUM

[~] 2. FROM
CVS Health Corporation UNITED STATES OF AMERICA
c/o Rani Habash, Esc. FEDERAL TRADE COMMISSION
Dechert LLP
1900 K Street, NW j
Washington, DC 20006-1110 2a. MATTER NUMBER FTC File No. 2410005

This subpoena requires you to appear and testify at the request of the Federal Trade Commission at a hearing [or deposition]
in the proceeding described below (Item 6).

3. LOCATION OF HEARING 4. YOUR APPEARANCE WILL BE BEFORE

IH will occur remotely via telephone or online

Maren Haneberg or other designated counsel
videoconferencing

+ ; ; ; 5. DATE AND TIME OF HEARING OR DEPOSITION
In advance of hearing, please provide email addresses of all
participants for invites and links October 24, 2024, at 9:00 a.m. ET, or at other date and time

as agreed upon by FTC counsel and counsel for the witness

6. SUBJECT OF INVESTIGATION

Efforts by CVS Health Corporation to timely comply with the Civil Investigative Demand issued to it on December 8, 2023;
and the steps CVS Health Corporation took to preserve documents related to the Civil Investigative Demand. See
Attachment A and attached resolution directing use of compulsory process.

7. RECORDS CUSTODIAN/DEPUTY RECORDS CUSTODIAN 8. COMMISSION COUNSEL

Lauren Peay, Records Custodian

Maren Haneberg, Deputy Records Custodian Maren Haneberg, Randall Weinsten, and Logan Wilke

DATE ISSUED COMMISSIONER'S SIGNATURE
INSTRUCTIONS AND NOTICES YOUR RIGHTS TO REGULATORY ENFORCEMENT
The delivery of this subpoena to you by any method prescribed by the FAIRNESS
Commission's Rules of Practice is legal service and may subject you The FTC has a longstanding commitment to a fair regulatory
to a penalty imposed by law for failure to comply. This subpoena enforcement environment. If you are a small business (under Small
does not require approval by OMB under the Paperwork Reduction Business Administration standards), you have a right to contact the
Act of 1980. Small Business Administration's National Ombudsman at 1-888-
REGFAIR (1-888-734-3247) or www.sba.gov/ombudsman regarding the
PETITION TO LIMIT OR QUASH fairness of the compliance and enforcement activities of the agency.
The Commission's Rules of Practice require that any petition to limit You should understand, however, that the National Ombudsman cannot
or quash this subpoena be filed within 20 days after service, or, if the change, stop, or delay a federal agency enforcement action.
return date is less than 20 days after service, prior to the return date.
The original and twelve copies of the petition must be filed with the The FTC strictly forbids retaliatory acts by its employees, and you will
Secretary of the Federal Trade Commission, and one copy should be not be penalized for expressing a concern about these activities.

sent to the Commission Counsel named in Item 8.

TRAVEL EXPENSES

Use the enclosed travel voucher to claim compensation to which you are entitled as a witness for the Commission. The completed travel voucher and this
subpoena should be presented to Commission Counsel for payment. If you are permanently or temporarily living somewhere other than the address on this
subpoena and it would require excessive travel for you to appear, you must get prior approval from Commission Counsel

A copy of the Commission's Rules of Practice is available online at http://bit.ly/FTCsRulesofPractice. Paper copies are available upon request.

FTC Form 68-A (rev. 11/17)
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RETURN OF SERVICE

| hereby certify that a duplicate original of the within
subpoena was duly served: (check the method used)

C inperson.
C by registered mail.

C. by leaving copy at principal office or place of business, to wit:

on the person named herein on:

(Month, day, and year)

(Name of person making service)

(Official title)
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ATTACHMENT A
SUBPOENA TO TESTIFY AT AN INVESTIGATIONAL HEARING
ISSUED TO CVS HEALTH CORPORATION
FTC FILE NO. 2410005

Pursuant to Commission Rule 2.7(h), 16 C.F.R. § 2.7(h), this Subpoena to Testify at an
Investigational Hearing (“Subpoena’’) requires the Company to designate one or more
executives, employees, or managing agents, or designate other Persons who consent, to testify on
its behalf with regard to each of the following matters. Unless the Company designates a single
individual, the Company must designate in advance and in writing the matters on which each
designee will testify. The Person(s) designated must testify about information known or
reasonably available to the Company and their testimony shall be binding on the Company. If
the Company believes that the required date of testimony would be unduly burdensome, you are
encouraged to discuss with the Commission counsel identified in this Subpoena whether there is
a mutually agreeable alternative date.

MATTERS FOR EXAMINATION

1. The Company’s efforts to timely comply with the CID, including but not limited to:

a. Resources allocated and efforts undertaken to collect, review, and produce
responsive documents and data, including but not limited to when and from whom
documents and data were collected;

b. Resources allocated and efforts undertaken to prepare and produce narrative
responses; and

c. The identities and relevant responsibilities of all people involved in the
Company’s efforts to comply.

2. The Company’s policies and procedures relating to the retention and destruction of
documents and data, and the steps the Company took to preserve documents related to
the CID.

DEFINITIONS

For the purposes of this Subpoena to Testify at an Investigational Hearing, the following
Definitions apply:

D1. The term “the Company” or “Company” means CVS Health Corporation, its domestic
and foreign parents, predecessors, subsidiaries, affiliates, partnerships, and joint ventures,
and all directors, officers, principals, employees, agents, and representatives of the
foregoing.

D2. The term “CID” means the Civil Investigative Demand issued by the Federal Trade
Commission to the Company on December 8, 2023, in FTC File No. 2410005.
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D3. All Definitions in the Civil Investigative Demand issued to the Company on December 8,
2023 apply to this Subpoena to Testify at an Investigational Hearing.

Page 2 of 2
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UNITED STATES OF AMERICA
BEFORE THE FEDERAL TRADE COMMISSION

COMMISSIONERS: Lina M. Khan, Chair
Noah Joshua Phillips
Rohit Chopra
Rebecca Kelly Slaughter
Christine S. Wilson

RESOLUTION DIRECTING USE OF COMPULSORY PROCESS
REGARDING ACTS OR PRACTICES
AFFECTING HEALTHCARE MARKETS

File No. P210100
Nature and Scope of Investigation:

To investigate whether any persons, partnerships, corporations, or others have engaged
or are engaging in unfair, deceptive, anticompetitive, collusive, coercive, predatory, exploitative,
or exclusionary acts or practices in, or affecting commerce related to healthcare markets,
including those regarding pharmaceuticals, pharmacies, pharmacy benefit managers, medical
devices, hospitals, or other healthcare facilities or services, in violation of Section 5 of the
Federal Trade Commission Act, 15 U.S.C. § 45, as amended or any statutes or rules enforced by
the Commission; and to determine the appropriate action or remedy, including whether
monetary relief would be in the public interest.

The Federal Trade Commission hereby resolves and directs that any and all compulsory
processes available to it, including subpoenas and orders to file special reports, be used in
connection with any inquiry within the nature and scope of this resolution for a period not to
exceed ten years. The expiration of this ten-year period shall not limit or terminate the
investigation or the legal effect of any compulsory process issued during the ten-year period.
The Federal Trade Commission specifically authorizes the filing or continuation of actions to
enforce any such compulsory process after the expiration of the ten-year period..

Authority to Conduct Investigation:

Sections 6, 9, 10, and 20 of the Federal Trade Commission Act, 15 U.S.C. §§ 46, 49, 50,
and 57b-1, as amended; and FTC Procedures and Rules of Practice, 16 C.F.R. § 1.1 et seq., and
supplements thereto.

By direction of the Commission.

CS /4+—

April J. Tabor
Issued: July 1, 2021 Secretary
Expires: July 1, 2031
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Exhibit 2
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UNITED STATES OF AMERICA
BEFORE THE FEDERAL TRADE COMMISSION

IN THE MATTER OF:
SUBPOENA AD TESTIFICANDUM FTC File No. 241-0005
ISSUED TO CVS HEALTH CORPORATION

DECLARATION OF MICHAEL CHASE
ON BEHALF OF CVS HEALTH CORPORATION

I, Michael Chase, declare under penalty of perjury as follows:

1. I submit this Declaration in support of CVS Health Corporation’s (“CVS”) Petition
to Quash Subpoena Ad Testificandum issued on October 16, 2024 (“Subpoena”) and to provide
further information on the topics identified in the Subpoena.

2. I am over 18 years of age and am competent to testify to the matters stated herein.

3. My title is Senior Counsel at CVS Health. My job responsibilities include, among
other things, managing antitrust investigations and litigations involving the Federal Trade
Commission (“FTC”) on behalf of CVS entities.

4. I am personally familiar with the facts set forth herein.

5. Starting in June 2022, CVS began working cooperatively with the FTC for more
than two years to get it what it needed in response to fourteen different subpoenas, civil
investigative demands (“CIDs”), and 6(b) orders: (1) the FTC issued its Pharmacy Benefit Manager
(“PBM”) 6(b) Order on June 6, 2022; (11) the very next day, the FTC issued a CID to CVS regarding
insulin prices on June 7, 2022; (111) the FTC issued a second insulin CID to CVS on August 29,
2022; (iv) the FTC issued a second 6(b) Order to Zinc Health Services, LLC on May 17, 2023; (v)

the FTC issued seven subpoenas on May 8, 2023 for investigational hearings occurring in July and
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August 2023 related to the insulin investigation;! (vi) the FTC issued a third insulin CID to CVS
on November 22, 2023; (vi) the FTC issued the CID at issue in this matter on December 8, 2023
relating to pharmacy contracting practices; and (vii) the FTC issued the Subpoena on October 16,
2024 requesting an investigational hearing relating to compliance with the December 8, 2023 CID.

6. CVS has worked diligently with dozens of FTC attorneys in parallel to comply with
the first thirteen of these FTC 6(b) orders, subpoenas, and civil investigative demands containing
more than 500 requests (including subparts) and requesting millions of pages of documents and
terabytes of data. CVS’s outside antitrust counsel participated in more than 60 meetings with FTC
staff as part of these efforts.

7. In total across all of these FTC requests, CVS has produced more than 1.7 million
documents spanning more than 13.3 million pages, and 5.8 terabytes of data covering more than
10 billion prescriptions and thousands of pharmacy networks.

8. At least 150 CVS employees have contributed to compliance efforts with the FTC’s
many requests, working closely with Dechert LLP antitrust attorneys and CVS’s Legal
Department. In addition, CVS retained an outside e-discovery vendor and dozens of contract
attorneys to manage the document review portions of the FTC requests, which alone has required
more than 200,000 hours of work to date to collect, process, review, and produce responsive
documents. CVS also retained an outside economic consulting firm to help manage responses to

the data requests, which involved terabytes of data.

! The FTC later decided to defer two of these investigational hearings.
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9. The Subpoena requests information on CVS’s efforts to timely comply with the
December 8, 2023 CID, including resources allocated and efforts undertaken to comply with
document and data requests, requests for narrative responses, the identities and relevant
responsibilities of people involved in the company’s efforts to comply, and the company’s policies
and procedures relating to document retention and preservation.

10. | The December 8, 2023 CID duplicates several of the requests from the FTC’s 6(b)
order issued to Caremark Rx, L.L.C. (“Caremark”) on June 6, 2022. Therefore, the efforts
undertaken to comply with the 6(b) Order outlined below are central to understanding the efforts
taken by CVS to comply with the December 8, 2023 CID.

11. Starting in June 2022, Caremark began complying with the FTC’s 6(b) Order. The
first document was produced to the FTC on June 29, 2022, which included personnel charts, along
with a proposed document custodian list. CVS promptly met with FTC staff to quickly resolve all
questions about this proposed list.

12. In September 2022, Caremark voluntarily gathered and produced relevant data
samples, field dictionaries, and ordinary course of business data reports to help FTC staff
understand how CVS’s information is stored in the ordinary course of business in order to
streamline compliance with the study.

13. In September and October 2022, Caremark voluntarily offered to hold multiple
educational sessions with FTC staff to answer questions about the data and discuss potential ways
that the requests could be tailored to facilitate expedited productions for the 6(b) study.

14. — After six months of relative quiet by the FTC (with the exception of a few questions

about the proposed custodian list that CVS quickly answered), staff finally provided CVS with a
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document custodian list in late December 2022. CVS began the process of collecting and reviewing
millions of documents from these custodians in January 2023.

15. Starting in February 2023, CVS began weekly meetings with FTC staff to provide
status updates on compliance with each specification and to answer staff's questions. By October
2023, because CVS had made substantial progress with the June 22, 2022 6(b) Order, CVS began
meeting with staff on a biweekly basis and has continued to do so as a courtesy as of the date of
this filing.

16. —_- Following multiple meetings with the FTC in September and October 2022 through
early 2023 aimed at explaining the limits of CVS’s data and figuring out which pieces of CVS’s
data would provide the FTC with what it needed for its analysis, the FTC waited several months
to inform CVS that no modifications or other tailored requests would be granted to better align the
requests with the manner in which CVS maintains its data in the ordinary course of business.
Nevertheless, CVS diligently sought to fulfill these unnecessarily overbroad and burdensome
requests. Due to the lack of reasonable and customary modifications to focus on what was truly
needed for the study, however, CVS notified FTC staff that it likely would need substantially
longer to comply with the data requests than if the requests had been more tailored.

17. By June 2023, CVS had completed the production of responsive information
spanning nearly a million pages, including ordinary course of business documents, personnel
charts, board minutes and presentations, descriptions of its contracting practices, a glossary of key
terminology used in pharmacy contracts, pharmacy audit data, specialty drug lists, specialty drug
reimbursement criteria and policies, plan sponsor contracts, and document retention policies.

18. Between July 2023 and December 2023, CVS continued its collection, review, and

production of millions of pages of documents. CVS also continued working with CVS’s IT
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department and outside economists to collect terabytes of data responsive to multiple burdensome
data requests. CVS submitted document and data productions to the FTC on a rolling basis. CVS
and the FTC staff worked collaboratively, continuing to meet regularly to discuss open items and
respond to questions about data, documents, and interrogatories.

19. | Asof December 2023, CVS had produced millions of pages of documents, multiple
terabytes of data, and a majority of the substantive, non-custodial requests in the 6(b) Order.

20. On December 8, 2023, the FTC issued a CID requesting information on CVS’s
contracting with clients and pharmacies, among other items. A majority of the specifications
repeated in substance those in the FTC’s June 6, 2022 6(b) Order, with some minor variations and
additions. Although CVS had worked with dozens of other FTC attorneys on the prior CIDs,
subpoenas, and 6(b) orders, the FTC assigned a new group of staff attorneys to oversee compliance
with the December 8, 2023 CID.

21. On December 22, 2023, for the sake of efficiency and to avoid unnecessary
duplication of more than 18 months of work on compliance with hundreds of requests, Dechert
requested that the new FTC staff do its best to leverage the prior CVS productions as well as the
existing knowledge of dozens of other FTC attorneys and economists that had gained an
understanding of CVS’s documents and data. Specifically, Dechert wrote to FTC staff in a
December 22, 2023 email:

The FTC has issued more than 600 requests including subparts to CVS over the

past 18 months. Together, more than 25 different FTC attorneys/economists have

participated in dozens of data/document meetings with CVS to sort through these

requests at length. Prior productions have to date totaled more than 10 million

pages, several terabytes of data, and dozens of interrogatory responses and white

papers. .. .In total, over the past 18 months CVS has received six FTC CIDs or 6(b)

orders with substantial overlap. CVS has invested a substantial amount of time and

resources to produce responsive materials and worked cooperatively with the FTC
to educate staff on its data and systems. Thus, CVS would appreciate it if these
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prior submissions and discussions could be leveraged here so that we’re not
unnecessarily repeating what has already been accomplished.

Given the enormous amount of information that the FTC already received from
CVS and the enormous amount of information requested in this CID, we would
greatly appreciate if this team could review the prior responsive information and
learn from colleagues about CVS’s databases and systems, then we can discuss
what is still needed that is not already covered or known by the FTC through the
other five CIDs and 6(b) orders. This will allow CVS to more efficiently prioritize
and avoid unnecessary duplication of efforts. These requests collectively have been
and continue to be an enormous burden on the company requiring substantial efforts
by more than 150 CVS employees over the past 18 months. And given the current
number of outstanding requests from the FTC on these and many related topics, we
expect it will take a substantial amount of time to collect any additional information
you may need. Thus, the more we can narrow the requests in this process and
leverage the many prior FTC productions and discussions, the better for all of us
rather than starting from scratch. CVS greatly appreciates Staff's consideration and
looks forward to continuing to work with you on this CID.

22. CVS continued to invest substantial time and resources to fully comply with the
6(b) Order while also working to accommodate staff's new requests in the December 8, 2023 CID.

23. On January 4, 2024, Dechert met with the FTC to discuss prioritization of
documents and data for the December 8, 2023 CID.

24. On January 8, 2024, CVS identified for the FTC more than 1.3 million pages of
documents and interrogatory responses, including organizational charts, pharmacy contracts,
provider manuals, audit guidelines, audit data, and document retention policies, that the new FTC
staff had sought to prioritize. With these productions, CVS complied with Specifications 5, 25(b),
26, 32, and 40 of the December 8, 2023 CID.

25. On January 26, 2024, CVS met with FTC staff to discuss progress on the December

8, 2023 CID and additional priority items.
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26. On February 2, 2024, CVS submitted updated legal entity charts in compliance with
Specifications 1, 2, 3, and 4 of the December 8, 2023 CID. CVS also submitted a proposed
custodian list and proposed search terms for custodial searches.

27. On February 20, 2024, CVS completed the production of all responsive data
requested in the 6(b) Order. Shortly thereafter, CVS provided a copy of the final sets of data to the
separate FTC team managing the December 8, 2023 CID in response to Specifications 16, 17, and
18.

28. On February 26, 2024, Dechert met with the FTC staff to discuss progress on the
December 8, 2023 CID.

29. On March 11, 2024, CVS identified for the FTC staff additional items responsive
to Specifications 8, 25, 32, 34, and 35 of the December 8, 2023 CID, including pharmacy contracts,
audit data, specialty drug policies and criteria, and specialty drug lists responsive to Specifications.

30. On March 28, 2024, the FTC responded to CVS’s February 2, 2024 custodian and
search term proposals with its own counterproposals. Among other items, the FTC represented
that CVS’s “search of custodial files run through December 31, 2023” would comply with the
December 8, 2023 CID. CVS relied on this representation in making its subsequent proposals to
the FTC.

31. OnApril 9, 2024, CVS met with the FTC staff to discuss progress on the December
8, 2023 CID, including the FTC’s custodian counterproposal.

32. On April 30, 2024, CVS met with the FTC staff to discuss progress on the
December 8, 2023 CID.

33. On May 6, 2024, CVS met with FTC staff to discuss progress on the December 8,

2023 CID.
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34. On May 8, 2024, CVS began collecting documents from the December 8, 2023 CID
custodians for whom CVS and the FTC had reached an agreement.

35. On May 15, 2024, CVS completed the production of all responsive custodial
documents requested in the 6(b) Order, with the exception of a small number of documents pending
a final privilege review.

36. On May 31, 2024, CVS notified the FTC that it would agree to search practically
all of the custodians identified in the FTC’s counterproposal for the December 8, 2023 CID.

37. On June 11, 2024, the FTC accepted CVS’s May 31, 2024 custodian proposal
regarding the December 8, 2023 CID.

38. | Between June and August 2024, CVS continued to collect and process documents
from custodians within the scope of the December 8, 2023 CID.

39. On July 8, 2024, CVS provided an update to the FTC on the status of document
collections, a search term hit report, and a counterproposal on search terms for the December 8,
2023 CID.

40. On July 15, 2024, the FTC responded to CVS’s search term counterproposal, with
additional proposed changes, for the December 8, 2023 CID.

4l. On July 30, 2024, CVS met with the FTC staff to discuss progress on the December
8, 2023 CID, including finalizing the proposed search term list.

42. On August 13, 2024, CVS met with the FTC staff to discuss progress on the
December 8, 2023 CID.

43. On August 22, 2024, CVS produced sample data responsive to Specifications 13,

14, and 15, along with questions regarding the December 8, 2023 CID.
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44. On August 26, the FTC sent CVS a letter with a proposed timeline of production
deadlines for the December 8, 2023 CID. This timeline proposed certain milestone dates for data
and document productions, ultimately concluding with CVS certifying compliance with the CID
on January 31, 2025. In this letter, the FTC reneged on its prior representation that CVS’s search
and production of responsive materials through December 31, 2023 would comply with the
December 8, 2023 CID.

45. On September 5, 2024, CVS met with FTC staff to discuss the proposed timeline
of production deadlines for the December 8, 2023 CID.

46. On September 6, 2024, CVS produced board materials, meeting minutes, and
specialty drug information responsive to Specifications 9, 10, 11, 12, 34, and 35 of the December
8, 2023 CID.

47. On September 23, 2024, CVS made its first rolling production of custodial files
from four priority custodians identified by the FTC for the December 8, 2023 CID.

48. On September 26, 2024, with the benefit of having collected the bulk of documents
from the agreed upon custodians to better understand the potential volume for review, having
resolved questions regarding the requested sample data, and in consideration of deadlines for other
outstanding and upcoming requests from the FTC, CVS sent the FTC an estimated timeline of
productions for the December 8, 2023 CID in response to the FTC’s August 26, 2024 proposal. In
general, CVS estimated based on this information that most deadlines would require about a month
longer than proposed by the FTC, with CVS ultimately completing its compliance with the CID
on February 28, 2025 instead of the FTC’s preferred January 31, 2025 deadline. Given that the
FTC had reneged on its proposed December 31, 2023 end date for custodial files, in the spirit of

cooperation and despite having no obligation to do so, CVS proposed April 1, 2024 as a cutoff
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date for compliance to align with the approximate dates on which it began updating its custodial
collections in response to the December 8, 2023 CID.

49. Since September 26, 2024, CVS continued to collect, review, and prepare rolling
productions to the FTC. As of October 15, 2024, CVS was preparing a rolling production of
custodial files.

50. On October 16, 2024, the FTC issued a subpoena pursuant to Commission Rule
2.7(h) for testimony regarding efforts undertaken to comply with the December 8, 2023 CID. CVS
was forced to reallocate resources to addressing this subpoena.

51. On October 21, 2024, Dechert met and conferred with FTC attorneys regarding the
October 16, 2024 subpoena.

52. On October 23, 2024, CVS notified the FTC that it would file on October 24, 2024
a petition to quash the October 16, 2024 subpoena.

53. To date, more than 100 CVS employees have assisted with complying with the
December 8, 2023 CID. CVS’s outside e-discovery vendor has spent more than 180,000 hours
collecting, reviewing, and preparing document productions related to this matter, including more
than 24,000 hours since December 8, 2023. As a result of these efforts, CVS has produced more
than 6.2 million pages across more than 1.2 million documents and approximately 5.8 terabytes of
data.

54. At the time of the October 16, 2024 Subpoena, CVS’s efforts to comply with the
December 8, 2023 CID were continuing with the goal of meeting the estimated February 2025
completion date. The additional burdens of the October 16, 2024 subpoena, however, may cause

delays in meeting certain estimated timelines in CVS’s September 26, 2024 letter.

10
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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Aftc%3Ad0c5a50a97d929b2. Public record. Not legal advice.