Payer-pharmaceutical alliances may be powerful if the right partners are involved.
The CVS-Aetna deal creates the first health-care triple threat, combining CVS’ pharmacy and pharmacy benefits manager platform with Aetna’s insurance business. The threat to pharmacies-or those that own them-is the way in which the two will leverage Aetna’s network of 46 million members to drive traffic to CVS stores. Aetna subscribers will be able to pick up prescription medicine in CVS stores while receiving pharmacy and medical services. Eventually, they may also be able to find lower copays only at CVS.
CVS CEO Larry Merlo told CNBC:
The next couple of years, you’ll see a dramatic change in terms of the store not just being about products but also service offerings that can help people on their path to better health.
CNBC reports retailers are now facing an entirely new form of competitor while contending with the potential threat of Amazon encroaching into their space. They have already begun to examine what the deal means for their business, and the solution may entail acquisitions, industry advisors say.
The pool of retailers directly affected is relatively small. They include Kroger, Wal-Mart, Walgreens Boots Alliance and, to a lesser extent, Rite Aid.
Of the retailers, Walgreens arguably has the most to lose. It is the most similar to CVS in business model and the most reliant on drug sales to drive traffic into stores. Read more about the players to watch at CNBC.
One analyst sees a natural connection between Wal-Mart and Humana as a reason the retail giant could acquire the health insurer. Humana steers its members to Wal-Mart pharmacies for deals on prescription co-pays.
Humana and Wal-Mart have been in a very tight relationship for six, seven years.
Dr. Ana Gupte, a senior health-care services analyst at Leerink Partners, told CNBC.
The New York Times reports when CVS Health and Aetna announced their merger on Sunday, their executives painted an image of a dawning health care utopia. The new company, combining one of the country’s biggest pharmacies with one of its largest health insurers, will create a world where patients will get the “human touch,” they said. Fewer people will fall through the cracks, they promised, and getting high-quality, low-cost medical care will be as close as your corner drugstore.
Skeptics say CVS and Aetna entered into the deal not to benefit consumers but to strengthen their competitive positions at a tumultuous time for the industry, in the hopes that the combination will yield new business opportunities. The two are already major health care players. If they wanted to change the world, critics asked, why haven’t they done so already? Others pointed out that a major rival, UnitedHealth Group, already owned a large pharmacy benefit manager, OptumRx, yet drug prices have continued to rise, and consumers remain frustrated. Read more about questions on just what CVS-Aetna will deliver in The New York Times
In The Business Insider, Aetna CEO Mark Bertolini asks us to envision with him:
Think of the Genius Bar at Apple, for example, and this ability to walk in the store and get help. I think this is the kind of idea we want to create in the stores, and I think we want to get going on the projects and pilots as soon as we can.
Some see a mortal threat to the nation’s hospitals with the coming of the CVS-Aetna model. Hospitals still see millions of patients in their emergency rooms and provide care for ailments that CVS and Aetna executives say could be avoided or directed to an outpatient location.CVS CEO Larry Merlo said of healthcare consumers:
What they lack is the element of convenience and coordination. When we talk about this unmet need, that’s really the unmet need that we’re filling.
Read about this and more in Forbes