Monday, December 4, 2017

CVS buying Aetna in deal valued at $69 billion

This is vertical integration at the highest level. The deal forces competitors to deliver more value and clients of PBMs to be even more sophisticated in their contract negotiations. For some tips on what to look out for see my earlier post Specialty Drugs Paid Under Medical Benefit Circumvent Cost Control Measures.

CVS, though, has been mired in a prolonged sales slump — pharmacy same-store sales slid 3.4% in the third quarter — and some analysts believe the Aetna deal has less to do with improving healthcare services than finding other ways to grow amid the threat of competition from Amazon and Wal-Mart Stores.

Source: Managed Care Magazine
CVS Health is buying Aetna for $69 billion in cash and stock in a long-expected deal that reflects a rapidly shifting health care landscape. A key component of CVS' business is its CVS Caremark pharmacy benefit management subsidiary. The deal could help CVS encourage Aetna's health plan participants to use the CVS/Caremark mail order prescription system and shop at the pharmacy company's retail stores, which will be able to offer more in-store health services.

If CVS-Aetna is approved, the union could ignite additional mergers in health care. Amazon is poised to enter the drug business in some fashion, leading to further disruption and uncertainty in the industry.

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