ibusinesslines.com July 20, 2018

CVS agrees to buy Aetna for $69 billion

07 December 2017, 07:16 | Kelvin Horton

AFP Getty Images A CVS Pharmacy drug store in Washington D.C

CVS agrees to buy insurance giant Aetna

"The question may be how much of those savings are passed on to the purchasers of health care - either the consumers or the employers on their behalf", Gail Wilensky, a senior fellow at the health care and education organization Project Hope, told NBC News.

Last year, large employers' concerns over two proposed mergers between health insurers Aetna and Humana Inc HUM.N and between Anthem Inc ANTM.N and Cigna Corp CI.N were a major factor in US antitrust regulators blocking the deals.

Experts say companies like CVS are charged with negotiating drug prices between makers and consumers and the acquisition of Aetna would give the pharmacy chain a better leverage in pricing discussions.

"Whether Amazon is going to enter the pharmacy business - it's not a question of whether, but when", said Craig Johnson, president of Customer Growth Partners.

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

Some have started charging mid-size corporate customers, who employ 2,000 to 10,000 people, additional fees for integrating medical claims and pharmaceutical claims when they are managed by different companies, Dross said, and could require those fees for larger clients as well. Both stressed that CVS-Aetna will also be better able to serve the aging population in the USA, which is increasingly relying on the government's Medicare and Medicaid programs for health care.

An industry ripe for change?


CVS Health Corp's CVS.N proposed purchase of Aetna Inc AET.N will change the way many major USA corporations buy health coverage for employees and raise new questions over the cost of those benefits, benefit consultants said.

But just what that change would look like - and what it would mean for Americans with anything from a cough to cancer - isn't immediately clear.

"As a consumer, I want to have choices", he said. "They're expanding the retail clinics so they won't be quite urgent care, but they'll resemble a direct primary care facility". "The question is, what does this do to competition further on?"

CVS doesn't need to buy Aetna to make that happen, says Lynn Quincy, a consumer health care analyst at Altarum, a health care analysis and consulting firm.

Their vision expands beyond capitalizing on CVS' existing MinuteClinic structure, which largely offers preventative services like flu shots, the companies' chief executives said in an interview.

In other words, CVS and Aetna would rather that sick people go to a pharmacy or minute clinic first instead of an already stressed emergency room.

The FTC has typically handled mergers of retail businesses like CVS. "We're still trying to figure out as an industry, how do we fund those?"

Bloss worries Aetna patients could be forced to get services from CVS. An integrated platform could make it easier for patients to get preventative and follow-up care that could prevent costly hospitalizations.

CVS on Sunday said it planned to buy Aetna for $69 billion. Aetna is the nation's No. 3 health insurer, competing against UnitedHealth Group Inc UNH.N , Anthem and Cigna to provide coverage for doctor and hospital visits.

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