Washington
The Justice Department approved the deal on the condition that the companies sell off Aetna’s Medicare Part D prescription drug business.
The tie-up will allow CVS — whose retail pharmacy business serves 5 million customers a day — to turn more of its brick-and-mortar locations into frontline clinics for basic medical services and patient monitoring. By deepening its knowledge of and relationships with patients, CVS has said, the combination could help Americans stick with medication regimens and stay out of the hospital.
Driving that new approach to care will be the immense amounts of data generated not only by CVS’s 9,800 retail outlets and 1,100 MinuteClinics, but also from Aetna’s 22 million medical members.
The result could make CVS a destination for more than just flu shots and treatment of minor illnesses.
“Our focus will be at the local and community level,” CVS chief executive Larry Merlo said in a statement, “to intervene with consumers to help predict and prevent potential health problems before they occur.”
Much of the U.S. health care system revolves around fixing costly ailments. But in trying to head off the worst cases, CVS and Aetna are aiming to become a part of the nation’s social fabric, using the local retail pharmacy as both a window into people’s lives beyond the doctor’s office and assuming the role of a health care assistant.
The CVS merger could lead to a future in which the company coordinates transportation for patients who have difficulty showing up for routine medical appointments, Aetna chief executive Mark Bertolini has said. That help could extend to nutrition counseling or even the use of wearable devices that automatically notify patients and health care providers of a potential problem.
The Aetna acquisition is also expected to give CVS more leverage in its negotiations with drugmakers over drug prices, analysts say. A substantial share of CVS’s revenues come from its role as a so-called pharmacy benefit manager (PBM) for insurance companies and employers. As health care costs have risen, PBMs have emerged as important power players in the pharmaceutical supply chain.
Critics of the CVS-Aetna deal had worried that the merger could lead to higher drug prices for Medicare Part D beneficiaries. Opponents such as the American Medical Association also had said the acquisition could heighten insurance premiums and out-of-pocket expenses more broadly.
“The AMA worked tirelessly to oppose this merger and presented a wealth of expert empirical evidence to convince regulators that the merger would harm patients,” AMA president Barbara McAneny said in a statement released on Wednesday. “We now urge the DOJ and state antitrust enforcers to monitor the post-merger effects of the Aetna acquisition.”
The Justice Department said on Wednesday that although the deal as originally proposed could have resulted in harm to competition, the two companies’ divestiture of Aetna’s Medicare pharmacy service effectively addresses the issue.
“Today’s settlement resolves competition concerns posed by this transaction and preserves competition in the sale of Medicare Part D prescription drug plans for individuals,” said Makan Delrahim, the Justice Department’s antitrust chief, in a statement.
The marriage of the two firms underscores a wider trend toward consolidation in the health care sector, and analysts said the CVS deal is likely to spur more acquisitions in the industry. DOJ’s announcement follows a decision last month by regulators to bless a similar PBM deal involving the insurance company Cigna and Express Scripts.
“The Cigna-Scripts and CVS-Aetna deals are doing what everyone else in the health care space is doing right now, just on a grander scale — reacting to continued cost pressures from market forces like the ACA, consumerism and other industry players building scale against each other,” said Brad Haller, a lawyer specializing in mergers and acquisitions at the firm West Monroe.
The industry faces outside pressures as well, from technology firms who increasingly view health care as a market opportunity.
Amazon.com, for example, is seeking to challenge the traditional dominance of drugstores by selling over-the-counter medicines and supplements. (Amazon chief executive Jeff Bezos also owns The Washington Post.) And the company is partnering with Berkshire Hathaway and JPMorgan Chase on a venture to reduce health care costs by targeting middlemen.