Just months after a federal judge approved a U.S. Justice Department settlement in November finalizing CVS Health Corp.’s nearly $70 billion acquisition of Aetna Inc. over the antitrust concerns of some medical and consumer groups, the health care giant is facing the biggest public health crisis the United States and arguably the world has faced in decades: the global COVID-19 pandemic.
Thomas Moriarty, the Woonsocket, Rhode Island, company’s top lawyer, is guiding CVS through the thicket of complex legal and regulatory issues the company now faces from the worldwide spread of the novel coronavirus, which is not only taking a big toll in lives but also disrupting business operations and supply chains of medical equipment and drugs on several continents.
Moriarty is executive vice president, chief policy and external affairs officer and general counsel, a position that he’s held since March 2017. CVS, the pharmacy retailer and pharmacy benefit manager, acquired Aetna, the nation’s third-largest health insurer by revenue, headquartered in Hartford, Connecticut, in late 2018.
Leading the company’s policy, government and public affairs, corporate communications and legal and regulatory teams, Moriarty is heavily involved in the company’s legislative and health care policy matters. He recently has been included in White House briefings on the coronavirus pandemic with other major health care executives and CEOs.
In recent weeks, CVS has opened three drive-through rapid COVID-19 testing centers in Rhode Island, Massachusetts, and Georgia using the Abbot ID NOW COVID-19 rapid test, which received emergency authorization from the U.S. Food and Drug Administration, with plans to open more testing centers soon.
CVS Health serves an estimated 38 million people through health insurance plans and related services and 102 million members through pharmacy benefit manager CVS Caremark. It operates 9,900 retail locations, including 1,100 walk-in medical clinics. Having the clinics and the nurse practitioners already employed allows CVS to do a 1,000 COVID-19 tests a day, Moriarty said.
CEO Larry Merlo also announced in late March the company’s intention to hire 50,000 additional CVS full-time, part-time and temporary employees and pay bonuses of up to $500 to store pharmacists, managers and other employees.
According to an annual proxy statement filed by the company on April 2, Moriarty’s 2019 compensation was $23 million, which would place him among the top earners as a corporate general counsel in the United States, more than twice the total $10.9 million he earned the year before.
His 2020, 2021 and 2022 performance shares “were accelerated to August 2019 to recognize his performance, retain his services through the Aetna integration and execution of our transformation initiatives, and ensure continuity of critical legal, policy and government affairs support through December 2022 (when the award vests),” according to a company spokesman.
Moriarty joined CVS in 2012 and previously held senior roles including general counsel, chief strategy officer and chairman of Red Oak Sourcing, a global generic drugs sourcing venture with Cardinal Health.
Before joining CVS, Moriarty was general counsel at Celgene, a biopharmaceutical company. He also spent 12 years at Medco Health Solutions, where he was general counsel, corporate secretary and president of global pharmaceutical strategies, also leading mergers and acquisitions and corporate development. Moriarty’s career started at the defunct law firm of Mudge Rose Guthrie Alexander and Ferdon in New York, which closed in 1995.
Our sister site Corporate Counsel interviewed Moriarty this week about how he is leading his company’s scores of lawyers through this historic pandemic. His answers have been edited for brevity and clarity.
Corporate Counsel: How large is your legal team?
Thomas Moriarty: We have over 260 lawyers across the country, each dedicated to the support of the business units, and a corporate services team that manages all corporate activities like [Securities and Exchange Commission] filings.
In addition, we have integrated our government affairs and public policy and communications functions with this legal group. Our collective group makes sure that the interests of patients, customers and employees are the focus of our decision-making process, which is facilitated by demonstrating its function by having these functions integrated.
CC: Is this integrated structure unusual?
TM: You are seeing it more and more. At the federal level, if you look at all the changes coming out of [Health and Human Services] and [Centers for Medicare & Medicaid Services] understanding the new legislation and translating it quickly with government affairs and public policy folks and putting it to the business folks to understand what they are doing.
There are no gaps because we have it all under one roof, a powerful model that is helping us to respond much more quickly.
CC: What are the major legal challenges right now for this combined health company in this pandemic?
TM: If you look at how things have so dramatically changed in the last six weeks with states of emergency in all 50 states and county and local levels, making sure our partners have a complete understanding of those changes and how they affect our business and how we can make a difference.
We have a very integrated legal team, and it is serving us very well as change is happening hourly, if not daily, that governs what we do each and every day.
CC: Do you use outside firms also?
TM: We do. My philosophy is that the core business should be within the four walls of the company, because you develop talent and expertise much better that way. But for complex M&A, tax and litigation, we have one in-house person who manages that, but we also use outside firms.
[Moriarty says their primary litigator is Williams & Connolly; McDermott Will & Emery for regulation and corporate; and Sherman & Sterling for M&A; and regional firms for litigation and business units.]
CC: What is the top challenge at the moment for CVS Health with this pandemic?
TM: Health care and health care providers and all we can deliver for patients and customers is very much in focus. We serve the needs of one in three Americans across our enterprise.
Also, legal affairs and regulation and all the implications of the CARES Act [Coronavirus Aid, Relief and Economic Security Act], as well as all the requirements at the state and local level in supporting access to health care providers, are at the center of our attention right now.
CC: What are the legal challenges for CVS Health/Aetna as an employer?
TM: We have health care professionals across the country, over 40,000 doctors, nurses, pharmacists and nurse practitioners.
We are providing care directly and working with patients—900,000 home visits for infusion. In our pharmacies, we see 4.5 million patients a day, and we are very concerned with people working in our pharmacies and homes.
[He said customer/employee social distancing, disinfection and following best practices for preventing COVID-19 "has been a real focus for us."]
CC: Have you had to get involved legally with supply chain issues with respect to drugs, sanitizers, face masks, etc., of which there have been reported shortages?
TM: We have had long-standing prior relationships and have been able to work with our suppliers to meet our needs. There have been spot outages of sanitizing products and wipes. We are seeing more continuity of supply as we work through this around safety and other issues to ease billing requirements and ease payment related issues.
It takes an enterprise effort, and I have been heartened with how our supplier and customer base have been working together during this time.
There have been a lot of supply chain questions. What we are seeing on the pharmaceutical supply chain, we formed Red Oak Sourcing, the largest generic sourcing company in the country, if not the world, and the infrastructure that allowed us to build gave us the ability to maintain a fairly good supply of all the key medications.
And with the ban that was put in India on key pharmaceuticals, we were able to work through that, and most of the ban has been lifted, and we are seeing the supply move again.
Our ability to work through that is differentiated from others. Also, all the work we are doing with our board of directors at a time for increased need for governance to make sure those issues are being looked at and met and that shareholders interests are being fully represented.
CC: How hard is it to ramp up 50,000 new hires during a pandemic?
TM: I couldn’t be prouder of our [human resources] colleagues with 50,000 hires, we are able to do this largely virtually and we are doing this with our clients like Hilton and travel and leisure [companies] and airlines who are needing to furlough and we are able to transition their employees and it is being done in a one- or two-day time frame and their furloughed employees.
[CVS said last month many of the new positions would be filled with furloughed employees from clients including Hilton Worldwide Holdings Inc. and Marriott International Inc. The company is offering 24 hours of paid sick leave for part-time employees and 14-day paid sick leave for those who test positive for COVID-19 or need to be quarantined for exposure to the virus. Paid sick leave was already offered to full-time employees.]
CC: What can you say about CVS’ financial performance?
TM: It’s a quiet period right now, but on the provider and health system perspective the stimulus CARES Act package—the $2.2 trillion package—has a number of provisions to help providers. The [Small Business Administration] lending program goes all the way up to companies with as much as 5,000 or 10,000 employees.
CC: Is there any post-pandemic planning going on?
TM: We waived charges for home delivery for our business [in the pandemic] and we have seen 800% growth in-home delivery from our pharmacies.
Aetna waived co-payments for telemedicine for COVID-19 diagnosis and testing, and we have seen a 300% to 400% increase in telemedicine, so people are taking serious shelter at home and leveraging new solutions for health care, and those learnings are how we plan for the reopening that eventually comes.
We see them continuing to be utilized even as the country reopens.