School Closings And Delays

CVS Is Buying Aetna in Massive Deal That Could Transform Health Care

CVS is buying health insurance giant Aetna, the companies announced Sunday.

If approved, the $69 billion acquisition — $77 billion including debt — would drastically remap the healthcare industry. CVS Health is a massive drugstore chain and prescription drug insurer, while Aetna is one of the nation’s largest health insurers.

It would also go down as the largest health insurance deal in history, far exceeding Express Scripts’ $29 billion acquisition of Medco in 2012, the last record-holder.

The acquisition is not a done deal. It will have to be approved by antitrust regulators, who have been skeptical of similar health care mergers.

Buying Aetna puts CVS in a better position to compete with other integrated health care providers, such as UnitedHealthcare and pharmacy benefits manager Optum. PBMs like Optum and CVS’s Caremark help manage prescription drug plans for commercial health insurers.

Together, UnitedHealthcare and Optum have already taken business away from CVS, said Ana Gupte, a health care analyst for investment firm Leerink.

Gupte added that Amazon’s rumored desire to enter into the pharmacy business could be another motivating factor.

Aetna, meanwhile, hasn’t been growing as quickly as its peers, Gupte pointed out. A shakeup could be good for business.

And by teaming up, CVS and Aetna are following broader industry trends, said George Hill, a healthcare technology & distribution analyst with RBC Capital Markets.

Pharmacies like CVS and health care providers like Aetna are looking for ways to make it cheaper and easier for their clients to access medication and care, he said, because that’s what their clients want. Joining forces is an efficient way to do that.

But it’s not entirely clear if or how quickly savings would get passed down to consumers. Gupte pointed out that Aetna already has a deal with CVS Caremark so prescription drug prices may not go down. Customers could see benefits down the road, however, if CVS turns some storefronts into clinics or primary care centers.

But advocacy groups have criticized the deal. The Coalition to Protect Patient Choice said that “mergers like these have a dismal history,” adding, “consumers suffer by paying more and getting less choice for the vital drugs they need.”

The prospects for the deal are uncertain since mergers involving health insurance companies have recently run into regulatory roadblocks. In 2015, Aetna and Humana announced a $34 billion merger, while Anthem agreed to acquire Cigna for $54 billion. Both deals were called off in February after they were blocked by federal judges citing antitrust concerns.

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7 comments

  • El~Ma

    “Transform healthcare” are two terms that do not belong in the same paragraph, much less as a description.

    “Health care” will never transform for the benefit of the patients/clients until money isn’t the center of the medical universe.

    There was once a time when doctors made decent livings and were well-respected within their communities. They knew everyone within their town or city section, they knew family histories, and they actually practiced medicine. A family doctor was able to set a broken bone, perform general surgeries, and stitch up a laceration without batting an eye. Family doctors brought babies into the world for patients whom THEY brought into the world, and it was a different type of medicine, altogether. Today? Forget it. The patient has to go to a specialist……..regardless of the situation, including a broken bone.

    So. Now, we’re going to have healthcare transformed? I’m about ready to go back to leechcraft and shaman practices, anymore. (sigh)

  • Lloyd Schmucatelli

    How could this not be illegal?

    Control the drug prices, jack up the insurance. Once the insurance is raised, jack up the drug prices.

    Blatant robbery.

    It’s failing before our eyes folks.

    Stay as healthy as you can.

    • El~Ma

      It ***could*** be illegal if our lawmakers didn’t have so many fingers into so many pork-fat-pies. Know what I mean?

      It’s already obscenely expensive for “maintenance” medications, like asthma inhalers and diabetic meds. In some cases, the generic medications are just as expensive as the name-brand. Why? Because all of the generics are being bought up by one company that can adjust their prices to whatever they wish to charge. When an asthma inhaler goes from $10 copay to $80 for one month’s supply, it’s all about the dollar. Money, money, money, money – the love of money is the root of all evil, and I have to agree with this.