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|May 20, 2019|
CVS-Aetna merger could reshape US health care
WASHINGTON--The Justice Department approved CVS Health's $69 billion bid to acquire insurer Aetna in a deal that could reshape how many Americans get basic health care.
CVS must divest Aetna’s Medicare Part D prescription drug plan business for individuals as part of the process, the DOJ said Wednesday. The companies' proposal to divest that business to WellCare Health Plans would satisfy the DOJ's competition concerns, the agency said.
“The divestitures required here 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 health care services that American consumers can obtain," Assistant Attorney General Makan Delrahim said in a statement.
The merger allows the Woonsocket, Rhode Island-headquartered CVS to expand its position as a drug store and pharmacy – it has more than 9,800 retail locations – into a destination for health coverage and medical care delivery.
After the addition of Aetna's 22 million insured and 2.2 million prescription drug plan members, CVS could shepherd more customers into its stores for routine ailments, it already gives shots and vaccinations at some – and away from costly visits to emergency rooms.
Aetna, headquartered in Hartford, Connecticut, is the nation’s third-largest health-insurance company and fourth-largest individual prescription drug plan insurer.
Many health care mergers simply expanded a company's reach within a certain aspect of the industry. This is a vertical merger that gives CVS more control over the total health care supply chain and more data on its customers, said Benjamin Isgur, who leads accounting firm Pricewaterhouse Coopers' Health Research Institute.
"Ultimately, it could scratch the itch for the consumer," Isgur said. "They want something that's more convenient, that is lower cost, and it's connecting the dots for them."
A majority of executives surveyed by PwC (58 percent) said health care mergers can be more difficult than expected, he said. "It might be several years before a full integration can be done and the consumer really starts to notice the full benefit," Isgur said.
CVS covers about 94 million in the USA with pharmacy benefits, and it acquired Caremark for $21 billion in 2017.
"CVS Health and Aetna have the opportunity to combine capabilities in technology, data and analytics to develop new ways to engage patients in their total health and wellness," CVS Health President and CEO Larry Merlo said in a statement. "Together, we will help address the challenges our health care system is facing, and we'll be able to offer better care and convenience at a lower cost for patients and payors."
CVS Health said its acquisition of Aetna, announced in December 2017, is expected to close within the early part of the fourth quarter of 2018. Upon the merger's completion, Aetna will be run as a standalone business within the company. (Source: USA Today)
Story Date: October 11, 2018