Saturday, 20 January, 2018

With Aetna Deal, CVS Looks To Turn Stores Into Health Care Hubs

This Wednesday Jan. 18 2017 file This Wednesday Jan. 18 2017 file
Nellie Chapman | 07 December, 2017, 19:16

"When you walk into CVS there's the pharmacy".

Buying Aetna puts CVS in a better position to compete with other integrated health care providers, such as UnitedHealthcare (UNH) and pharmacy benefits manager Optum.

The clinics started off as a place to treat basic health care needs like sinus infections or strep throat.

Aetna shares were trading at $184.84 at 6:33 a.m.in NY, well below CVS' $207-a-share offer for the company - a sign investors are skeptical the deal will close at the current price.

"This combination brings together the expertise of two great companies to remake the consumer health care experience", CVS Chief Executive Officer Larry J. Merlo said in a Sunday press release.

The drugstore chain CVS has reached a blockbuster agreement to acquire Aetna, one of the nation's largest health insurers. Bertolini will be on the combined company's board but won't be in charge of Aetna unit.

"Aetna has a talented and dedicated group of employees working to build a healthier world every day".

"They'll be pretty much a soup-to-nuts health company. except for the hospital part of it", said Craig Johnson, president of Customer Growth Partners, a retail consulting and research firm. "This is the next step in our journey, positioning the combined company to dramatically further empower consumers".

CVS plans to use its low-priced clinics to provide medical services to Aetna's roughly 23 million medical members. The deal would combine CVS' pharmacy business and pharmacy benefit manager platform, also referred to as a PBM, with Aetna's insurance business. CVS has more than 9,700 pharmacies and 1,100 Minute Clinics, walk-in locations across the country. A merged CVS-Aetna might have enough clout to drive down prescription prices overall, but lowering prices on high-priced specialty drugs might remain an elusive goal, Winkler said.

The deal comes as healthcare payers and pharmacies are responding to a shifting landscape, including changes in the Affordable Care Act, rising drug prices and the threat of competition from online retailers such as Amazon.com (amzn).

The company expects to invest billions of dollars in the coming years to add clinics and services, largely financed by diverting funds away from other planned investments.

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

He says the obvious motivation behind the merger is that CVS and Aetna can save money on prescription drugs by simplifying the complicated way medications are paid for, and eliminating one middlemen looking to make a profit.

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. Just last month the Justice Department sued to block AT&T's $85 billion purchase of Time Warner. Earlier this year, Aetna dropped a $34-billion bid for rival insurer Humana after a federal judge blocked the deal on antitrust grounds.

CVS is the No. 2 US provider of prescription drug benefits and competes with larger rival Express Scripts Holding Co ESRX.O . Some of that business may have to be sold to address antitrust concerns.