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News & Press: Industry News

CVS to Acquire Aetna

Monday, December 4, 2017   (0 Comments)
Posted by: Bradley Coffey, MA, AAOE Government Affairs
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Woonsocket, RI - In a sign of the increasing consolidation of the healthcare industry, CVS Health, the United States' largest pharmacy provider, announced it would acquire Aetna, one of the largest health insurers in the United States. The $69 billion deal is seen as an attempt by CVS to diversify its revenue streams as its retail pharmacy business has faced increasing competition from competitors.

Under the terms of the deal, according to the Washington Post, Aetna would continue to operate as a standalone business unit. The agreement would bring Aetna's 22 million policyholders under the banner of CVS Health and could lead to lower health spending if the company can push policy holders to use CVS' prolific walk-in clinics for minor ailments as opposed to seeking treatment in higher cost emergency rooms. On the other side, consumer advocates have raised concerns that the deal could limit patient choice and increase barriers to entry to new firms.

Additionally, analysts have forecasted that, if approved, the acquisition could lead to further consolidation in the insurance market with Walgreens and Walmart seen as potential acquirers of Humana.

The deal will now go through two approval processes, the first will be a vote by shareholders to accept or reject the acquisition. The second will be review by the Department of Justice (DOJ) or the Federal Trade Commission (FTC). If the DOJ/FTC determines that there is a likelihood of anti-competitive behavior, or the merger could lead to anti-competitive behavior, the federal government could sue to prevent the deal. 

The Advocacy Council will continue to watch for developments in this merger.

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