Friday, October 27, 2017

Why CVS Won't Buy Aetna

Bruce Japsen CONTRIBUTOR
OCT 27, 2017 @ 08:00 AM 

I write about healthcare business and policy  Opinions expressed by Forbes Contributors are their own.


Even before reports surfaced Thursday claiming that CVS Health was in talks to buy Aetna, the nation’s third-largest health insurer, the two were known to be discussing forming closer ties.
But a full-blown merger of the healthcare giants would be complicated and unlikely given recent antitrust scrutiny in healthcare and given that CVS is already going into business with an Aetna rival, Anthem.

Anthem just last week said it was forming its own pharmacy benefit management company IngenioRx with CVS, which operates a PBM. That was seen as a way to compete with the nation's largest health insurer, UnitedHealth Group, which owns a PBM, OptumRx.

But CVS operating a PBM with Anthem, the No. 2 health insurer, while owning Aetna, the No. 3 insurer, would be unusual coming off a period of intense antitrust scrutiny of the health insurance industry. Aetna and Humana, the nation’s fourth-largest insurer, pulled the plug on their merger last year after intense antitrust scrutiny over the potential creation of a monopoly purchaser of health services.

Neither CVS or Aetna would comment. “As a matter of policy we don't comment on market rumors such as this,” a CVS spokesman said Thursday afternoon.

The Wall Street Journal reported Thursday afternoon that the drugstore chain was in talks to buy Aetna for more than $200 a share, citing “people familiar with the matter.” Such a deal would value Aetna at more than $66 billion, the report said. The New York Times also reported that Aetna and CVS have been in discussions about a potential merger for “at least two months.”

But the Anthem partnership came about since those talks. The Anthem partnership involves a five-year agreement with CVS Health for services effective Jan. 1, 2020. IngenioRX  “will combine its member and provider engagement initiatives and market leading pricing with CVS’ point-of-sale engagement, such as member messaging and Minute Clinic.”

https://www.forbes.com/sites/jpmorganchase/2017/10/09/informing-investment-decisions-using-machine-learning-artificial-intelligence/#16f4da5870d2

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