FierceHealthcare reports that industry analysts say that multiple market forces combine to make drugstore behemoth CVS’s possible takeover of giant insurer Aetna (based in Hartford but moving to New York) attractive for both two companies. CVS is based in Woonsocket, R.I.
“One of the biggest ones is Amazon’s possible entrance into the prescription drug distribution business, which Leerink Partners analyst Ana Gupte says is a ‘massive threat’ to CVS, both in the pharmaceutical market and front-store sales,” Fierce reported.
The St. Louis Post Dispatch has reported that the online retail giant has already been approved by 12 states to become a wholesale pharmaceutical distributor there.
If the CVS-Aetna merger happens, CVS could respond to the Amazon-induced market pressure on its retail pharmacies by using more of its retail spaces to offer such healthcare services as labs and dialysis, say analysts for Jeffries Group, the investment bankers.
Aetna, for its part, has powerful reasons to want a merger with CVS.
For one, Fierce reports, “CVS’s capabilities, including its Minute Clinics and its Coram home infusion business, could help Aetna improve health outcomes and reduce costs. Aetna’s leaders have also long expressed a desire to move care closer to the consumer, and they’ve hinted at the possibility of working closer with CVS once the insurer’s long-term pharmacy benefits management (PBM)contract with CVS expires in 2020.”
Gupte also said that that Aetna has probably felt it should enter the PBM business given the announcement by another big insurer, Anthem that it would build its own PBM partnership with CVS—and UnitedHealth’s success with its in-house PBM, OptumRx.
Aetna “likely sees solidifying a lasting relationship with its preferred partner CVS as a way to leave [Anthem] jilted at the altar,” she said.
Fierce reported that “Gupte pointed out that Anthem was likely not looking for a long-term relationship with CVS anyway, as its ultimate goal was to ‘go it alone’ with its IngenioRx PBM brand. Still, she predicted that Anthem might walk away from its pact with CVS if the company consummates a deal with Aetna.”
