The proposed $66-billion merger between CVS and Aetna – the most expensive healthcare deal to date – may cut down drug prices by eliminating the middlemen. The proposed deal is covered in depth by various publications. For example, Bloomberg News suggests that the merger could be the end of the pharmacy-benefit business. Reuters reports that the move will enable the insurer to better negotiate prices with pharmaceutical manufacturers and set customer out-of-pocket costs. Others suggest that the move is an attempt to counterbalance Amazon’s arrival into the pharmaceutical market. See Los Angeles Times. According to the St. Louis Post-Dispatch, Amazon is now licensed as a pharmaceutical wholesaler in at least 12 states, including Nevada, Arizona, North Dakota, Louisiana, Alabama, New Jersey, Michigan, Connecticut, Idaho, New Hampshire, Oregon and Tennessee. And its entry into a pharmaceutical market will likely disturb the present model of pharmaceutical distribution.
The Amazon’s entry, a possible merger between CVS and Aetna, and a recent partnership between CVS and Walgreens to create a performance-based network put lots of pressure on pharmaceutical players – including independent pharmacies – to consider merging to keep up with the potential healthcare cost savings and increase in profit margins. The trend has already started and it is reported that Walgreens is currently considering merger with Express Scripts. See Reuters.
On a side note, if CVS and Aetna merger goes through, Anthem’s efforts to partner with CVS for its pharmacy benefit needs will not lead to a favorable outcome. To remind, earlier this year Anthem has announced that it will not renew its contract with Express Scripts due to its drug pricing methods. And if CVS merges with Aetna – another insurer – CVS is not likely to be a good match to manage Anthem’s drug benefit.