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Aetna deal to change how big employers buy health benefits

Aetna deal to change how big employers buy health benefits

"A company like CVS has 10,000 brick and mortar locations", said Zack Cooper of Yale School of Public Health.

"Delrahim was very clear in his concerns about behavioral decrees and then put his money where his mouth is when he brought the AT&T case", Kully said.

One of the few areas where the companies directly overlap is in the Medicare drug business.

CVS CEO Larry Merlo said during a conference call with analysts Monday that the combined resources of CVS and Aetna could make the pharmacies and walk-in clinics kind of like the medical version of the Genius Bar at Apple Stores, with experts dispensing quick, convenient and reliable health care knowledge. Combining the two businesses may help trim costs by tying together pharmacy services with health care benefits, aligning the services that otherwise would have separate profit goals.

An announcement could come later on Sunday. "Walgreens is likely to consider its own strategy to respond to the CVS deal and could involve purchase of a managed-care company such as [Humana] or [WellCare] or a PBM such as [Express Scripts]", she said. And if CVS and Aetna are allowed to merge, more deals could follow that may drastically change how you get health care services.

The CVS-Aetna deal could attract similar scrutiny if regulators feared it could block Aetna customers from frequenting other pharmacies or contracting with other PBMs, several investors said, asking not to be named because they were not authorized to talk to the press. The clinics also provide services that can't be purchased online.




CVS Health Corp's CVS.N proposed purchase of Aetna Inc AET.N will change the way many major USA corporations buy health coverage for employees and raise new questions over the cost of those benefits, benefit consultants said.

The mammoth acquisition pairs a company that runs more than 9,700 drugstores with an insurer covering around 22 million people. CVS Health (CVS)isa massive drugstore chain and prescription drug insurer, while Aetna (AET) is one of the nation's largest healthinsurers.

Aon's Winkler expects this will lead large companies to turn to their insurer for pharmacy benefits the same way mid-sized companies have. "If you think about it, we actually don't have anything like that", Jefferies analyst Brian Tanquilut said recently. Analysts say clinics aren't especially profitable, but they are important because they draw people into the stores and help build deeper customer relationships. A clinic visit also can be cheaper than a $100 doctor visit for someone who doesn't have insurance, but they have drawbacks.

It's unlikely that CVS will really transform itself from a pharmacy company to an integrated health care company, says Martin Gaynor, a professor of economics at Carnegie Mellon University.

Jessy Tatenco, 23, buys household items and over-the-counter medications for his three children at CVS. He feels more comfortable in a doctor's office or traditional clinic setting. "Overall, this type of vertical integration is probably good for the health care system, but we've got to keep our eyes open".

But advocacy groups have criticized the deal.


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