Aetna, CVS merger sparks talk of Humana eyeing deal with Walmart

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

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

Photo A CVS Pharmacy store in Manhattan.

That appears to be the logic behind CVS's decision to buy health insurer Aetna for $69 billion. And if CVS and Aetna are allowed to merge, more deals could follow that may drastically change how you get health care services.

Under the terms of the deal, CVS will pay about $207 a share, said this person, who was not authorized to speak publicly about the transaction before it was announced. After CVS factors in Aetna's debt, the total cost of the deal will top $77 billion.

The vision is that customers, especially those covered by Aetna insurance policies, will seek more of their basic health care at an expanded CVS clinic.

The CVS drugstore chain is based in Rhode Island, while health care company Aetna is based in CT.

"Aetna has a talented and dedicated group of employees working to build a healthier world every day". "To the extent CVS can get a leg up from the point of view of cementing relationships with customers ... this is a competitive advantage", he said. "This is the next step in our journey, positioning the combined company to dramatically further empower consumers".

"The combined company will also be able to better understand patients' health goals, guide them through the health care system, and help them achieve their best health". The clinics also provide services that can't be purchased online. The deal would combine CVS' pharmacy business and pharmacy benefit manager platform, also referred to as a PBM, with Aetna's insurance business. The mammoth acquisition pairs a company that runs more than 9,700 drugstores and 1,100 walk-in clinics with an insurer covering around 22 million people. CVS is already the largest provider of Medicare drug plans, and Aetna is the fifth largest, according to data compiled by Bloomberg Intelligence. Over time, a bulked-up CVS may gain more negotiating leverage over prices, but it is hard the say how much would trickle down to customers.

Aon's Winkler expects this will lead large companies to turn to their insurer for pharmacy benefits the same way mid-sized companies have. Leerink analyst David Larsen said in a recent note that the CVS-Aetna deal has a decent chance of approval because regulators may believe it will put pressure on manufacturers to hold down drug prices. Jeff Bezos, the Amazon chief executive, and his e-commerce juggernaut have already overturned many industries: book buying, retail shopping, groceries and Hollywood, using fierce customer loyalty and enormous reach as cudgels against incumbent players. Additionally, we're still unsure if the Affordable Care Act will be replaced.

But four antitrust experts said there is little doubt the deal will be approved, although it might need to meet conditions to convince antitrust enforcers to sign off. Last month, however, the Justice Department sued to block just such a "vertical" merger between AT&T and Aetna dropped a $34-billion bid for rival insurer Humana after a federal judge blocked the deal on antitrust grounds. Some of that business may have to be sold to address antitrust concerns.

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