Why the CVS-Aetna deal could push Walmart to buy Humana

Why the CVS-Aetna deal could push Walmart to buy Humana

That appears to be the logic behind CVS's decision to buy health insurer Aetna for $69 billion.

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

What does CVS and Aetna merger.

It's unclear just how quickly customers might start seeing savings - and how much cheaper drugs might actually be, for that matter. 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. Aetna will have two of its directors, in addition to Aetna CEO Mark Bertolini join the board of CVS. Both stressed that CVS-Aetna will also be better able to serve the aging population in the US, which is increasingly relying on the government's Medicare and Medicaid programs for health care.

Patients also may find the CVS-Aetna combination much more involved in managing their care, especially for those with expensive chronic conditions like diabetes.

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.

While high prescription drug costs have been a concern of policymakers and patient advocates for some time now, it's not clear that even a beefed-up CVS would be able to tame the worst of the cost inflation.


Aetna shareholders will own about 22% of the combined company, while CVS shareholders will own the remainder.

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. UnitedHealth Group offers health insurance, administers drug benefits and runs a growing network of doctors and clinics. 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.

The CVS-Aetna deal could attract similar scrutiny if regulators feared it could block Aetna customers from frequenting other pharmacies or contracting with other PBMs, several investors said, asking not to be named because they were not authorized to talk to the press.

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?

Merging CVS, which has 10,000 retail clinics and pharmacies, with Aetna means more health services will likely move out of doctors' offices to store-based providers across the nation. After CVS factors in Aetna's debt, the total cost of the deal will top $77 billion.

The ultimate goal, after all, is a land grab.

The deal "would definitely be scrutinized, but ultimately we still see a path for it to get through", Newshel said in an email. Others worry that consumers insured by Aetna might be restricted in where they can get health care or fill prescriptions.

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