CVS-Aetna merger could re­shape US health care

Phar­macy gi­ant will be more of a one-stop shop

USA TODAY US Edition - - FRONT PAGE - Mike Snider

The De­part­ment of Jus­tice ap­proved CVS Health’s $69 bil­lion bid to ac­quire in­surer Aetna in a deal that could re­shape how many Amer­i­cans get ba­sic health care.

CVS must di­vest Aetna’s Medi­care Part D pre­scrip­tion drug plan busi­ness for in­di­vid­u­als as part of the process, the DOJ said Wed­nes­day. The com­pa­nies’ pro­posal to sell that busi­ness to Wel­lCare Health Plans would sat­isfy the DOJ’s com­pe­ti­tion con­cerns, the agency said.

“The di­vesti­tures re­quired here al­low for the cre­ation of an in­te­grated phar­macy and health ben­e­fits com­pany that has the po­ten­tial to gen­er­ate ben­e­fits by im­prov­ing the qual­ity and low­er­ing the costs of the health care ser­vices that Amer­i­can con­sumers can ob­tain,” As­sis­tant At­tor­ney Gen­eral Makan Del­rahim said in a state­ment.

The merger al­lows the Woonsocket, Rhode Is­land-based CVS to ex­pand its po­si­tion as a drug­store and phar­macy – it has more than 9,800 re­tail lo­ca­tions – into a des­ti­na­tion for health cov­er­age and med­i­cal care de­liv­ery.

Af­ter the ad­di­tion of Aetna’s 22 mil­lion in­sured and 2.2 mil­lion pre­scrip­tion drug plan mem­bers, CVS could shep­herd more cus­tomers into its stores for rou­tine ail­ments – it al­ready

gives shots and vac­ci­na­tions at some – and away from costly vis­its to emer­gency rooms.

Aetna, based in Hart­ford, Con­necti­cut, is the third-largest U.S. health-in­sur­ance com­pany and fourth-largest in­di­vid­ual pre­scrip­tion drug plan in­surer.

Many health care merg­ers sim­ply ex­panded a com­pany’s reach within a cer­tain as­pect of the in­dus­try. This is a ver­ti­cal merger that gives CVS more con­trol over the to­tal health care sup­ply chain and more data on its cus­tomers, said Ben­jamin Is­gur, who leads ac­count­ing firm Price­wa­ter­house Coop­ers’ Health Re­search In­sti­tute.

“Ul­ti­mately, it could scratch the itch for the con­sumer,” Is­gur said. “They want some­thing that’s more con­ve­nient, that is lower cost, and it’s connecting the dots for them.”

A ma­jor­ity of ex­ec­u­tives sur­veyed by PwC (58 per­cent) said health care merg­ers can be more dif­fi­cult than ex­pected, he said. “It might be sev­eral years be­fore a full in­te­gra­tion can be done and the con­sumer re­ally starts to no­tice the full ben­e­fit,” Is­gur said.

CVS cov­ers about 94 mil­lion in the USA with phar­macy ben­e­fits, and it ac­quired Care­mark for $21 bil­lion in 2017.

“CVS Health and Aetna have the op­por­tu­nity to com­bine ca­pa­bil­i­ties in tech­nol­ogy, data and an­a­lyt­ics to de­velop new ways to en­gage pa­tients in their to­tal health and well­ness,” CVS Health Pres­i­dent and CEO Larry Merlo said in a state­ment. “To­gether, we will help ad­dress the chal­lenges our health care sys- tem is fac­ing, and we’ll be able to of­fer bet­ter care and con­ve­nience at a lower cost for pa­tients and pay­ors.”

CVS Health said its ac­qui­si­tion of Aetna is ex­pected to close within the early part of the fourth quar­ter of 2018. Upon the merger’s com­ple­tion, Aetna will be run as a stand­alone busi­ness within the com­pany. CVS shares were up 1 per­cent Wed­nes­day to $80.32.

MATT ROURKE/AP

CVS’ merger with Aetna has re­ceived fed­eral ap­proval.

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