CVS Health is reportedly in talks to buy the nation's
third-largest health insurer, Aetna — a deal that would allow the
pharmacy giant to expand into an entirely new arena of health care.
A
successful deal could push millions of Aetna's members toward CVS's retail
pharmacies, walk-in MinuteClinics and home services for
infusion drugs at a time when retail pharmacy companies are facing stiff
competition.
It
would also give Aetna the ability to move deeper into the
lives of the 44.7 million people it serves and manage their health care more
efficiently. For example, the insurer might be able to create better
coordination of care using insights from CVS's retail clinics and
pharmacies.
The Wall Street Journal reported that CVS
Health had made a proposal to buy the health insurer for as much as $66
billion, which could make the deal the biggest merger of 2017.
Citing
sources familiar with the matter, the Journal said that the offer was more
than $200 per share. The newspaper also reported that the proposed deal
was a way to guard against the looming threat that Amazon might soon enter the pharmacy business.
Amazon has not announced such plans, but analysts expect it will enter the
space and pose a major threat to retail pharmacies.
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Analysts
had been anticipating a deal. CVS Health has lost contracts in its retail
pharmacy business recently, creating pressure on the company to find a way to
grow, said Brian Tanquilut, a stock analyst at the investment banking firm
Jefferies.
Meanwhile, health
insurers have increasingly been moving toward bringing the negotiation of
drug prices in-house, instead of outsourcing that work to companies called
pharmacy benefit managers.
CVS
Health may be best known for its retail pharmacy business, but it has been
evolving. It works as a pharmacy benefit manager that negotiates drug prices on
behalf of insurance companies. It also runs MinuteClinics, home infusion
services and long-term care pharmacies that all mean it has a close
relationship with patients — all of which could be valuable to Aetna.
Insurers
have been seeking closer relationships with consumers as they try to manage
health-care costs, making sure that people seek care in the appropriate
low-cost venues, and manage health conditions and adhere to taking medications
rather than having expensive health emergencies.
“The
strategic value that [the deal] brings is in the sense that health care has
changed so much — that all these insurance companies need or want to be as
close to the patient and beneficiary or plan members as possible,”
Tanquilut said.
Neither
company confirmed the report.
“As a
matter of policy we don’t comment on market rumors such as this,” David
Palombi, a spokesman for CVS Health said in an email.
Aetna
spokesman T.J. Crawford said the company does not comment on rumors or
speculation.
Adam
Fein, president of Pembroke Consulting, said that the deal makes sense, given
the evolution of CVS Health, a company that already has many ways to connect
with the consumer, and insurance companies' desire to contain health-care
costs.
“Depending
on how it's structured, this could potentially be of great benefit to
consumers, because there will be an opportunity to offer more efficient and
more effective health insurance plans,” Fein said.
Other
health insurers have already brought the business of negotiating drug prices
in-house. UnitedHealth Group owns its own pharmacy benefit manager, Optum.
Anthem recently announced it would establish its
own pharmacy benefits manager called IngenioRx, which includes a partnership
with CVS Health.
“This
is part of the strange world of the health insurance and PBM industry,” Fein
said. “Many companies are frenemies.”
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