America's Largest Drug Store Is Buying Aetna For $67.5 Billion

CVS Aetna

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

CVS has more than 9,700 pharmacies and 1,100 Minute Clinics, walk-in locations across the country.

Experts say companies like CVS are charged with negotiating drug prices between makers and consumers and the acquisition of Aetna would give the pharmacy chain a better leverage in pricing discussions.

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

Together, UnitedHealthCare and Optum have already taken business away from CVS, said Ana Gupte, a health care analyst for investment firm Leerink.

But it's not entirely clear if or how quickly savings would get passed down to consumers.

CVS and Aetna also want to go beyond just clinic visits to help patients and customers. CVS says its pharmacists and nurse practitioners can provide ongoing health care for people with chronic conditions like diabetes, high blood pressure or asthma.

Aetna CEO Mark T. Bertolini echoed Merlo, and said the merger would make the company more "competitive" and help improve healthcare for millions of Americans. The merged company will also be better able to offer employers one stop for their health insurance.

Bertolini said during the conference call that many Medicare/Medicaid patients are "confused" and "wandering through the system" seeing numerous doctors and taking many different medications.

CVS Health Corp's CVS.N proposed purchase of Aetna Inc AET.N will change the way many major US corporations buy health coverage for employees and raise new questions over the cost of those benefits, benefit consultants said.

Hartford, Connecticut-based Aetna and Woonsocket, Rhode Island-based CVS both manage Medicare prescription drug coverage.

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So how close to reality is this vision, one where a trip to the drug store makes visits to the doctor's office or hospital less necessary?

That's the goal, according to a statement by CEO Larry Merlo on his company's deal for Aetna.

But the fact that CVS and Aetna are not really competitors could make it more likely that Washington will approve the combination.

There is already speculation that the other insurers could now be a good strategic fit for CVS rival Walgreens as well as Walmart, which operates a lucrative pharmacy business.

"Whether Amazon is going to enter the pharmacy business - it's not a question of whether, but when", said Craig Johnson, president of Customer Growth Partners.

Could Amazon, which has expanded its own brick and mortar operations through the opening of its own book stores and purchase of Whole Foods, be looking to become a big drug store retailer as well? CVS Health Corp.is also one of the nation's biggest pharmacy benefit managers, processing more than a billion prescriptions a year for insurance companies, including Aetna.

Aetna will be operated as a separate unit and Aetna's existing leadership is expected to run the Aetna businesses, Merlo said.

Health insurers meanwhile have sought to cut costs amid steep prescription drug price rises and requirements to care for even the sickest patients under the Affordable Care Act.

The deal "would definitely be scrutinized, but ultimately we still see a path for it to get through", Newshel said in an email.

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