Dive Brief:
- CVS Health's deal to buy insurance giant Aetna for $69 billion may change the way large employers buy healthcare coverage, and it could also force employers to rethink common assumptions about how they purchase prescription drug benefits, sources told CNBC.
- Large employers normally keep the purchase of healthcare coverage separate from prescription drug benefits in order to negotiate lower prices with pharmaceutical companies, but CVS's Aetna purchase will likely disrupt that practice, CNBC said. Both CVS and Aetna argue their deal will lower healthcare costs for large employers and give them more power to negotiate lower drug prices.
- According to Healthcare Dive, Aetna will continue operating as a separate business unit led by its current management. The acquisition is expected to close in the second half of 2018.
Dive Insight:
The acquisition is expected to generate $240 billion in revenues, guaranteeing CVS a huge share of the health plan market.
But as Healthcare Dive reports, the deal could draw scrutiny from antitrust regulators. The U.S. Department of Justice blocked the merger of Aetna and Humana, and Walgreens' takeover of Rite-Aid pharmacies was directed to scale back earlier this year.
Expect the drive to lower the cost of prescription drugs (especially among large employers) to become a big storyline in 2018. Healthcare costs continue to balloon, and many in the benefits industry blame pharmacy benefit managers (PBMs) for the trend, citing opaque business practices to which even employers aren't privy. Specialty pharmaceuticals are a particular pain point.
Employers aren't alone in their frustration with PBMs. In October, Anthem dropped Express Scripts Holding in favor of creating its own drug plan, accusing Express Scripts of overcharging it by billions of dollars.
What's unclear in the CVS case is what exactly the model for a prescription drug plan directly offered by a singular prescription drug retailer would look like. Benefits managers, wary of introducing sweeping new changes directly after open enrollment season, should nonetheless pay attention to this and other such mergers.
