CVS is buying Aetna in massive deal that could transform health care

CVS Is Said to Agree to Buy Aetna, Reshaping Health Care Industry

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

CVS CEO Larry Merlo said during a conference call with analysts Monday that the combined resources of CVS and Aetna could make the pharmacies and walk-in clinics kind of like the medical version of the Genius Bar at Apple Stores, with experts dispensing quick, convenient and reliable health care knowledge. "We have the ability to begin to bend that cost curve and at the same time help people achieve their best health".

The company explained this with an example of how diabetics could get quicker, easier treatment. 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".

It's unclear just how quickly customers might start seeing savings - and how much cheaper drugs might actually be, for that matter. The consideration comprises $145 per share in cash and 0.8378 CVS shares for each Aetna share.

CVS also recently took over the pharmacy operations at Target.

Mark Bertolini, Aetna's CEO, said the companies would not raise prices for consumers.

CVS's shift from a drugstore chain to health care provider is years in the making, Boston College health economist Sam Richardson pointed out, foreshadowed in the company's earlier purchases of Caremark and Omnicare, and its 2014 decision to stop selling tobacco products.

"We also believe that the Trump administration is more business-friendly" and that regulators may view a CVS-Aetna deal "as a way to continue to put pressure on manufacturers and drug prices", David Larsen, an analyst at Leerink Partners, said in a recent note.

CVS is the No. 2 USA provider of prescription drug benefits and competes with larger rival Express Scripts Holding Co ESRX.O . "This is a different angle because the delivery part is focused on pharmacies, not hospitals or doctor's offices", Gellad says.

Aetna shareholders will own about 22% of the combined company, while CVS shareholders will own the remainder. Both deals were called off in February after they were blocked by federal judges citing antitrust concerns.

"Patients with diabetes will receive care in between doctor visits through face-to-face counseling at a store-based health hub, and remote monitoring of key indicators such as blood glucose levels", CVS said in the announcement of the acquisition. UnitedHealth Group offers health insurance, administers drug benefits and runs a growing network of doctors and clinics. The deal comes at a time when the future of the health care industry is up in the air.

The CVS-Aetna deal could attract similar scrutiny if regulators feared it could block Aetna customers from frequenting other pharmacies or contracting with other PBMs, several investors said, asking not to be named because they were not authorized to talk to the press. That could keep millions of customers away from Amazon if the retail giant decides to expand into prescription drugs. The companies said that together they want to offer more health care services in CVS drugstores.

Others, however, say there is no conflict since CVS and Aetna aren't in the same line of business.

The ultimate goal, after all, is a land grab. But he said would be reluctant to get medical services there.



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