CVS Health: Pharmacy Giant To Buy Aetna In $69 Billion Dollar Deal

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American pharmacy giant CVS Health reportedly closed a $69 billion deal early Sunday to buy Aetna, one of the nation’s largest health insurance and HMO corporations. According to the New York Times, the deal, one of the largest of 2017, may reshape the American healthcare industry.

CVS will pay roughly $207 per share for Aetna, based on Friday’s closing prices; most of that, $145 per share, will be paid in cash, with the remainder being paid in newly-issued CVS stock.

According to the report, the merger was driven by rumors that Amazon has plans to enter the American pharmaceutical market; a move that could challenge or completely wipe out small community providers like CVS, which Amazon has proven capable of in the past. When the two companies met, they discussed a merger between CVS and Aetna to create a new form of healthcare delivery: combining CVS’ 10,000 pharmacy locations with Aetna’s insurance and healthcare provision to create what has been described as “one-stop shopping” for healthcare.

CVS Health Chief Executive Larry J. Merlo is optimistic that the merger would be beneficial to consumers on several levels, by consolidating all services under one roof, including pharmacy, nurses, blood testing, and other medical services, and cutting out the middlemen.

“We know we can make health care more affordable and less expensive,” Merlo said in an interview. And it is absolutely, if theoretically, possible that an amalgamated service — a health insurance provider that owns the clinics and pharmacies — could create a drop in price for consumers.

But some experts are concerned that the merger could create a sort of monopoly for CVS, especially in smaller communities and for high-care individuals. As CNBC reports, Pramod John, CEO of Vivio Health, suggested that patients who require more comprehensive care, which he described as “the highest profit [patients] in the industry,” could find them more tightly locked-in to CVS than ever.

Meanwhile, others have expressed concerns that consumers may be left with little option but to go to CVS to have a prescription filled, especially if and when CVS is also their insurance and care provider. And when consumers are left with no other outlet, it is up to the ethics of the company not to profit from the lack of other options.

Aetna is currently 43rd, and CVS Health 7th, on the Fortune 500. Together, they could make a bid for the top spot.
Aetna is currently 43rd, and CVS Health 7th, on the Fortune 500. Together, they could make a bid for the top spot. Featured image credit: Joe RaedleGetty Images

So while CVS and Aetna have reached an agreement, and it is considered a vertical integration, which is generally seen as less threatening to antitrust authorities, there is still a very real chance that the Department of Justice will block the merger; federal officials have recently and frequently blocked mergers between insurance providers, including Aetna and rival Humana, and it remains to be seen what effect this deal may ultimately have.