CVS and Aetna's game-changing merger gains crucial approval

A landmark health care merger is inches away from the finish line. CVS has gained the US government's approval to buy Aetna.

Posted: Oct 10, 2018 1:02 PM

(CNN) -- A landmark health care merger is inches away from the finish line. CVS has gained the US government's approval to buy Aetna.

The $69 billion acquisition, announced in December 2017, will drastically remap the health care industry. CVS (CVS) is a massive drugstore chain and prescription insurer, and Aetna (AET) is one of the nation's largest health insurers.

It is the largest health insurance deal in history, far exceeding Express Scripts' (ESRX) $29 billion acquisition of Medco in 2012, the last record-holder.

To gain the Trump administration's approval, Aetna agreed to spin off its Medicare Part D prescription drug business. The Justice Department settled with CVS and Aetna on Wednesday. Pending a judge's approval of the settlement, the deal will be completed.

The deal was expected to gain antitrust approval. CVS dominates the pharmacy business, but it accepts insurance from Express Scripts and other rivals, not just the CVS-owned Caremark plan. Aetna and CVS' businesses won't compete at all after Aetna divests its Medicare business.

CVS already serves as the pharmacy benefits manager for Aetna customers, so CVS won't be adding any share of the market by buying the insurer. One big caveat: The companies negotiate those agreements every few years, so CVS wouldn't have to worry about losing Aetna to a rival one day.

Antitrust regulators believe people could benefit from the combined powers of the two companies. The merger could lower American's health care costs and improve the quality of care patients receive, Assistant Attorney General Makan Delrahim said in a statement.

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. PBMs like Optum and CVS's Caremark help manage prescription drug plans for commercial health insurers.

It also helps the companies fend off Amazon (AMZN), which looms large in the health care market even though it hasn't made a major entry yet. Amazon sells its own line of over-the-counter drugs online, and it recently bought online prescription delivery business PillPack. But Amazon does not sell insurance or clinical appointments. Not yet, anyway.

What it means for consumers
CVS has more than 9,700 pharmacies and 1,100 Minute Clinics. The combination could make it easier for people to monitor diseases without having to see a doctor.

The combined company envisions transforming CVS; walk-in clinics into something like the medical version of the Genius Bar at Apple Stores. Experts will dispense quick, convenient and reliable health care knowledge, Aetna and CVS have said.

Currently, CVS' walk-in locations offer vaccinations, lab tests and diagnosis and treatment of illnesses like strep throat and ear infections from nurse practitioners and physician assistants. In the future, CVS and Aetna said that patients will be able to go to a local CVS in between doctor visits for glucose level monitoring, counseling on how and when to use medications and advice on weight loss programs and better dietary habits.

The new company says it wants to create a "new front door" to the health care system.

If realized, that vision could save patients a lot of time and money. How quickly customers might start saving — and how much cheaper drugs might actually be — isn't yet clear.

Advocacy groups have criticized the deal.

"The combination of CVS and Aetna creates an enormous market force that we haven't seen before," said George Slover, senior policy counsel for Consumers Union, in a statement on Wednesday. "This type of consolidation in a market already dominated by a few, powerful players, presents the very real possibility of reduced competition that harms consumer choice and quality."

The-CNN-Wire
™ & © 2018 Cable News Network, Inc., a Time Warner Company. All rights reserved.

Terre Haute
Overcast
44° wxIcon
Hi: 48° Lo: 38°
Feels Like: 42°
Robinson
Overcast
41° wxIcon
Hi: 47° Lo: 38°
Feels Like: 37°
Indianapolis
Overcast
43° wxIcon
Hi: 49° Lo: 39°
Feels Like: 39°
Rockville
Overcast
44° wxIcon
Hi: 47° Lo: 36°
Feels Like: 42°
Casey
Overcast
38° wxIcon
Hi: 46° Lo: 37°
Feels Like: 32°
Brazil
Overcast
44° wxIcon
Hi: 48° Lo: 38°
Feels Like: 42°
Marshall
Overcast
44° wxIcon
Hi: 47° Lo: 37°
Feels Like: 42°
Rainy & Cold
WTHI Planner
WTHI Temps
WTHI Radar

WTHI Events

 

Illinois Coronavirus Cases

(Widget updates once daily at 7 p.m. CT)

Confirmed Cases: 383687

Reported Deaths: 9792
CountyConfirmedDeaths
Cook1774655433
DuPage23099606
Lake20815511
Will18621427
Kane16903347
Winnebago10340180
St. Clair7993220
Madison7221154
McHenry6452121
Champaign617229
Unassigned4778270
Peoria462273
McLean420934
Rock Island407090
Sangamon406763
Kankakee342180
Macon316052
Kendall270430
Tazewell268756
LaSalle242663
DeKalb239942
Coles193539
Adams188820
Williamson188859
Boone187825
Clinton178926
Vermilion174110
Jackson154826
Whiteside146027
Knox131716
Randolph128315
Ogle12187
Effingham11834
Marion102819
Stephenson10187
Franklin9869
Grundy9777
Morgan93424
Monroe92530
Bureau91316
Jefferson90748
Henry8537
Christian82529
Macoupin81611
Union78725
McDonough77120
Lee7402
Shelby69112
Fayette68524
Douglas6849
Crawford6516
Livingston64610
Woodford63714
Montgomery61516
Logan5994
Saline5679
Fulton5271
Jo Daviess5127
Bond5079
Warren5068
Iroquois49519
Wayne48612
Jersey47521
Cass46311
Perry44716
Carroll41911
Moultrie4154
Johnson3620
Pike3586
Lawrence3368
Richland33516
Clay31413
Hancock3144
Clark31017
Washington3102
Mason3091
Greene29515
Cumberland2946
Mercer2706
White2704
De Witt2646
Jasper26410
Piatt2540
Pulaski2401
Wabash2285
Ford19814
Menard1861
Edgar15710
Marshall1573
Massac1552
Henderson1290
Hamilton1262
Alexander1241
Brown1110
Edwards1090
Gallatin1072
Scott1070
Putnam920
Schuyler901
Stark863
Calhoun660
Hardin540
Pope421
Out of IL50

Indiana Coronavirus Cases

(Widget updates once daily at 8 p.m. ET)

Confirmed Cases: 164581

Reported Deaths: 4143
CountyConfirmedDeaths
Marion26055792
Lake14436358
St. Joseph9606168
Elkhart9271138
Allen8647231
Hamilton6400115
Vanderburgh617162
Tippecanoe396715
Porter347550
Hendricks3418134
Monroe335638
Johnson3286130
Delaware311575
Clark306263
Vigo275340
Madison250896
LaPorte239261
Cass229724
Warrick205065
Kosciusko201127
Floyd187468
Howard169466
Bartholomew147958
Marshall147428
Dubois146426
Wayne142031
Grant133539
Henry133030
Boone129150
Hancock124744
Noble122935
Jackson121018
Dearborn103128
Morgan100340
Lawrence96838
Gibson94412
Clinton92416
Daviess92334
Shelby90632
LaGrange82815
Knox81810
Harrison81024
Posey7767
Putnam77616
Fayette76719
DeKalb76011
Jasper6885
Miami6715
Steuben6608
Montgomery63122
White62316
Greene57838
Adams5607
Scott55413
Decatur52839
Ripley4838
Whitley4836
Clay4617
Sullivan45714
Wells45611
Huntington4455
Starke4438
Wabash4439
Orange42425
Spencer4176
Randolph39210
Jennings38713
Washington3873
Franklin38325
Fulton3785
Perry36914
Jefferson3655
Pike35718
Carroll34313
Jay3386
Fountain3293
Tipton28423
Vermillion2721
Parke2564
Rush2464
Blackford2394
Newton23711
Owen2151
Martin2050
Pulaski1783
Crawford1631
Brown1473
Ohio1337
Union1140
Benton1130
Switzerland980
Warren911
Unassigned0236