Houston Chronicle

CVS is pushing deeper into consumers’ lives with its $69 billion bid forAetna.

- By Tom Murphy

A drugstore chain that used to hawk cigarettes behind the front counter now wants to offer nutrition advice and work with your doctor to keep you healthy.

CVS Health says it wants to use its $69 billion acquisitio­n of the insurer Aetna to dive deeper into managing customer health, with its nearly 10,000 stores becoming “front doors” for care. The companies plan to expand the health services offered through CVS locations and get more involved in helping patients stay on their medicines or manage their chronic conditions.

The deal announced Sunday will pair the second-largest U.S. drugstore chain with the third-largest health insurer. Here’s how it will likely play out.

Q: How will stores change?

A: The deal pushes CVS further down a path it started years ago when it began adding clinics to its stores and later quit selling tobacco. Over time, CVS plans to bulk up the health care services it offers through its stores and the space it devotes to them.

The company might add to the 1,100 clinics it operates, expand into selling more medical equipment or offer nutritioni­sts to counsel customers.

CVS leaders think its vast footprint — nearly 70 percent of the U.S. population lives within 3 miles of a CVS pharmacy — gives it a chance to deepen its relationsh­ip with customers.

Q: Are they trying to replace my family doctor?

A: CVS wants to complement doctor care, CEO Larry Merlo said Monday during a conference call to discuss the deal. For example, Merlo said, people with diabetes typically see their doctor several times a year but may have trouble sticking with a treatment plan. The company said it can help patients stay on a plan, using its network of pharmacist­s, clinics and other future services.

Q: Will this make my prescripti­on drugs cheaper?

A: Not in the near term, according to Edward Jones analyst John Boylan.

The deal doesn’t change how drugs are priced. It just puts key players in that negotiatio­n — drugstores and pharmacy benefits managers — under the same roof as an insurer, Boylan said.

CVS processes more than a billion prescripti­ons annually as one of the nation’s largest pharmacy benefit managers, running prescripti­on drug coverage for large clients like Aetna.

Over time, a bulked-up CVS may gain some negotiatin­g power over prescripti­on prices, but it’s hard to say whether that will translate to lower prices.

Q: What’s the business case for this deal?

A: Buying Aetna gives CVS a way to better compete with other huge national companies like UnitedHeal­th Group. The nation’s largest insurer also runs a big pharmacy benefit management business and operates clinics and doctor offices.

Aetna will operate as a separate brand inside CVS. The deal also will help CVS keep rivals from poaching its 22 million customers.

Retailers like CVS face growing online competitio­n, especially for the consumer products they sell outside store pharmacies. By adding more services, the drugstores will be selling something customers cannot buy online.

Q: When will this deal close?

A: The companies expect that to happen in the second half of next year. However, it still has to pass federal antitrust scrutiny.

Aetna has a rough record with that. The Department of Justice sued to stop its roughly $34-billion acquisitio­n of fellow insurer Humana. That deal fell apart earlier this year.

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