On October 10th, the U.S. Department of Justice (DOJ) green-lighted the $69 billion merger between two titans of the healthcare industry: pharmacy benefit manager CVS Health and healthcare insurance provider Aetna. CVS was the last large independent pharmacy manager not associated with a major insurer.
About a month prior to this merger, the DOJ approved healthcare insurance provider Cigna acquiring Express Scripts, another retail pharmacy company, for $52 billion.
OptumRx is already associated with UnitedHealth, and Amazon is putting out feelers with the goal of entering the pharmaceutical industry.
Just what exactly is going on here?
What the CVS CEO envisions
Big name healthcare providers are merging with big name pharmaceutical providers to—in theory—streamline the process of coordinating healthcare for consumers. A sort of centralized one-stop shop for your healthcare and prescription needs. CVS CEO Larry Merlo claims that this merger will lead the healthcare industry into a new era of more personalized healthcare.
He paints this scene: Chronic illnesses are on the rise in the U.S. and amount to about 86% of healthcare costs in the U.S. When a doctor in Aetna's network tells a patient to take their blood pressure medication during their appointment, there is no real follow-up with the patient afterward—aside from a phone call or perhaps a letter. Therefore, the doctor doesn’t know if the patient is following the treatment plan until they see them again, perhaps until it’s too late.
Merlo reasons that with almost 10,000 CVS retail locations in the U.S., the pharmacists and professionals who work at each one have direct access and face-to-face interactions with these patients. They will be the ones who are ensuring that Aetna patients are following the prescription and treatment plan their doctor laid out for them. When everything is centralized, Merlo envisions a cheaper solution with better outcomes compared to the current American healthcare system.
What the reality could be
However, once the mergers are finalized and the ink dries, this will likely mean that millions of American consumers will have less control over their prescription drugs and healthcare. According to their website, CVS Health manages and fills 2.5 billion prescriptions every year, with 90 million members. On top of that, Aetna provides insurance to some 38.8 million people in the U.S.
Buyers beware: When only a few large companies control the market or the industry, they ultimately can do what they want with the already-rising costs of healthcare because they have less competition. This could mean that they can take away your choice of insurance provider or pharmacy you prefer. The American Medical Association, the body that represents U.S. physicians, argued against the merger, saying that the merger could result in higher prices for prescription medicine.
We at the NC Coalition for Fiscal Health are advocates for the financial well-being of individuals, families, and businesses in North Carolina. Let us keep you informed on the outcome of this merger in the future by signing up here.
Moving forward and what to keep an eye out for
The DOJ’s ruling represents the biggest victory for these mega-mergers at this stage. Antitrust laws exist in the U.S. in order to prevent a few companies controlling one industry, but this one somehow made it through with conditions. Aetna was ordered to sell its private Medicare drug plans.
At the time this article was written, the merger has momentarily hit a snag because New York Department of Financial Services Superintendent Maria Vullo has threatened to derail the merger. She has stipulated that the companies not raise insurance premiums in the state and that they agree to state regulation of its pharmacy benefits manager.
There is no doubt that these companies still have to cut through some red tape in the following months, but according to Merlo, the merger should be finalized by the end of 2018. Keep an eye out for price fluctuations in your prescriptions, and whether you are “required” to go to Aetna or CVS. On our part, the NC Coalition for Fiscal Health will continue to keep an eye out for developments on this merger and how it will affect North Carolina families in the future.
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