Pharmacy Giant CVS & Aetna Near Merger, What This May Mean to You

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Big news out of Washington D.C. this month, when the US government announced that it has granted drugstore chain and prescription insurer CVS with approval to purchase health insurance giant Aetna in a $69 billion acquisition – the biggest health insurance deal in history.  What does this mean to the health care industry and to you as an employer?  Let’s explore.

While they’re certainly a dominating force in the U.S. pharmacy business, CVS is also a player in the insurance business as owners of the Caremark plan. They currently accept insurance from Express Scripts and other rivals, and this will continue to be the case moving forward beyond the acquisition. 

With quite a bit of negotiation leading up to the crucial approval, one concession from Aetna was that the company agreed to let go of it’s Medicare Part D prescription drug plans, which previously competed with the Caremark plan, helping to satisfy the Federal Antitrust requirements.  In fact, many antitrust regulators believe that individuals and businesses will benefit greatly from the combined efforts of the two companies, potentially lowering health care costs in the U.S. while improving patient care, according to Assistant Attorney General Makan Delrahim.  He believes that this merger will put them in a better position to compete with larger healthcare and insurance giants, by offering patients a comprehensive, integrated option.  With over 9,700 pharmacies and 1,100 Minute Clinics under the CVS name, the merger may afford patients easier access to services to help monitor diseases without having to see a doctor.  In fact, CVS’s overall vision involves revolutionizing the traditional pharmacy experience, offering walk-in clinics that are modeled after an Apple Genius Bar, providing fast, easy and reliable health care knowledge. Vaccinations, lab tests, and simple diagnosis for every day issues such as influenza and ear infections will be provided by nurse practitioners and physician assistants on staff.  There will also be increased access to preventive health monitoring in the form of advising on when to take medications, addressing weight loss and using proper nutrition.  While this sounds visionary and exciting, it remains to be seen if and how these proposed changes will affect healthcare costs. And some groups, such as the Consumers Union, have concerns. 

"The combination of CVS and Aetna creates an enormous market force that we haven't seen before," said George Slover, senior policy counsel for Consumers Union, in a statement on Wednesday. "This type of consolidation in a market already dominated by a few, powerful players, presents the very real possibility of reduced competition that harms consumer choice and quality."

Final acquisition approvals are still pending, but it is looking likely that the deal will be finalized soon.