What You Need to Know About the CVS-Aetna Merger

CVS Health recently announced the execution of a merger agreement with Aetna, at a transaction value of $77 billion, according to a company press release. The merger would combine CVS, which owns thousands of pharmacies and a pharmacy benefit manager (PBM), with insurance giant Aetna.

In the release, CVS said that the merger presents a novel opportunity to rethink access to lower cost, high-quality care in various settings.

"With the analytics of Aetna and CVS Health's human touch, we will create a health care platform built around individuals,” said Larry J. Merlo, president and chief executive officer, CVS. “We look forward to working with the talented people at Aetna to position the combined company as America's front door to quality health care, integrating more closely the work of doctors, pharmacists, other health care professionals and health benefits companies to create a platform that is easier to use and less expensive for consumers."

Integrating the 2 entities is in line with the recent health care trend towards value-based care and patient-centricity, according to the release.

Fox Business reported that Aetna covers 23.1 million medical members, 14.5 million dental members, and 15.2 million pharmacy benefit managers (PBMs), while CVS has more than 9700 locations and brings in approximately $40 billion in specialty drug revenue.

National Community Pharmacists Association CEO B. Douglas Hoey, MBA, expressed concern that the merger may not generate cost savings and may have a negative impact on consumers and pharmacy providers.

“For all of the talk about cost savings, prescription drug costs have clearly continued to rise despite previous vertical mergers like UnitedHealth’s 2015 acquisition of Catamaran,” Hoey said in a press release. “Moreover, the anticipated efficiencies CVS and Aetna tout may benefit the merged company more than the consumer, who is likelier to be driven to use health care resources chosen by the health plan rather than those of his or her own choosing.”

While this merger may have implications for independent specialty and non-specialty pharmacies, the affect on patients is unclear since they will have access to similar services. FOX Business said it is likely that patients may benefit from lower prescription drug costs in the short-term due to the alignment.

Hoey disagrees with this conclusion and said the growing scrutiny on PBMs may be an underlying reason for the merger.

“We believe that one possible driver for this merger is the increased scrutiny on the role pharmacy benefit managers play and the growing evidence that they contribute to the higher costs of prescription drugs,” he said. “The main source of purported cost savings touted by CVS and Aetna may be in containing the costs PBMs add to prescriptions.”

An analyst who covers Aetna for Evercost ISI told Fox that Aetna-insured patients would not be greatly affected by the merger, but they may be gradually shifted towards CVS pharmacies and retail clinics over time.

“Control and manipulation of patient data is also a concern. Consumers should have the freedom to choose the providers that produce the highest quality health outcomes and cost-effectiveness, rather than being coerced into using certain physicians or pharmacies,” Hoey said.

The consolidation of the health care industry in this way is nothing new. Over the past few years, several other players have participated in similar practices to greater align services, including independent specialty pharmacies merging with hospitals and other entities.

For example, Prime Therapeutics—a health plan-owned PBM—recently partnered with Walgreens Specialty Pharmacy to launch AllianceRx Walgreens Prime. This merger aligns mail service, specialty pharmacy, PBMs, a health plan, and a retail giant.

In an interview with Specialty Pharmacy Times, Joel Wright, CEO, AllianceRx Walgreens Prime said that, “being connected to the health plan, as well as with the Prime PBM and the capabilities they bring from a clinical and programmatic standpoint, and add in our mail services and specialty pharmacy business with its link into retail, it is a more holistic model than what I think you see out there in the market. That is why it is going to be disruptive; it’s an opportunity for us to really go in and change the way some of these things work in the industry.”

While mergers such as the CVS-Aetna deal offer the potential for cost-savings and patient benefits, the long-term impact is a concern for some stakeholders.

“In short, bigger is not always better. A close examination of whether this acquisition will lead to higher drug prices and fewer quality and convenience options for consumers is warranted,” Hoey said.