CVS Health announced Sunday that it agreed to buy Aetna for a whopping $69 billion. The deal would be considered one of the largest transactions of the year, combining the drugstore giant and one of the biggest health insurers in the United States. The merger comes at a time of tempestuous transformation in healthcare, with much unknown for government programs and the future of the Affordable Care Act; as well as the weight of rising medical costs and the soaring price of prescription drugs – this deal has a potential to reshape the nation’s healthcare industry if approved.
New York Times states “A combined CVS-Aetna could position itself as a formidable figure in this changing landscape. Together, the companies touch most of the basic health services that people regularly use, providing an opportunity to benefit consumers. CVS operates a chain of pharmacies and retail clinics that could be used by Aetna to provide care directly to patients, while the merged company could be better able to offer employers one-stop shopping for health insurance for their workers.” The possible downside may be limiting where patients can receive care or fill a prescription if those with Aetna insurance are forced to go to CVS for much of their care. In addition, David Balto, an antitrust lawyer, who has been sharply critical of combinations among insurers and pharmacy benefit managers, said that “he was wary of having retailers in charge of people’s health. He argued that doctors may be in a better position to treat illness than retail executives.”
Aetna CEO Mark Bertolini described the vision as “creating a new front door for healthcare in America. We want to get closer to the community, because all health care is local.” In congruence, CVS Health CEO Larry Merlo added “imagine a world where health care is better designed around the people who use it, which is one of the challenges we have today”. As a part of the deal, Bertolini would join the CVS Board and Aetna would be run as a stand-alone business unit.
Are CVS and Aetna worried about the prospect of regulators moving to block their deal? They both played it down, saying the breakup fee for the transaction is not especially large, reflecting that belief. Finally, Bertolini asserted that ‘the companies will not raise prices for consumers’ stating “it doesn’t make sense for us to charge people more when we want more people in the store.”
We will be sure to provide updates as they come available.