CVS-Aetna deal to change how big employers buy health benefits

CVS Health Corporations (CVS.N) proposed the purchase of Aetna Inc (AET.N) and will bring about a change in the way many major corporations of the United States buy health coverage for employees and raises new questions over the cost of those benefits. This is per the statement of benefit consultants.

On Sunday CVS said that it planned to buy Aetna for 69 billion dollars. Most of the national companies are employing more than 20,000 people to keep the medical coverage completely separate from that of their prescription drug benefits. They believe that they are paying less by shopping those contracts around to competitors within each industry.

CVS and Aetna argue that this particular deal will lower the cost of healthcare for employees of large corporate customers, giving the company greater control to negotiate down the prices of drugs and better manage the use of those medicines. The CEO of Aetna Mark Bertolini told Reuters in an interview that it is the lower overall cost of therapy but not the drugs. Also, he said that it is not just the prescription benefit manager (PBM) but is the overall outcome for the patient.

On the other hand, the employers are expected to scrutinize those kinds of claims very closely, according to the benefit consultants in touch with hundreds of large employers. They are still taking an approach where they are waiting and seeing as to whether there is a direct favorable impact on their pricing of a CVS-Aetna combination. This is per the statement given by Jim Winkler who is the senior vice president for health at Aon, part of Aon Plc (AON.N). In the previous year, the concerns of the large employers over two proposed mergers between health insurers Aetna and Humana Inc (HUM.N) and between Anthem Inc (ANTM.N) and Cigna Corp (CI.N) were a major factor in the United States antitrust regulators blocking the deals.

The industry experts are of the viewpoint that it is less likely to happen with CVS-Aetna because of their minimal direct overlap, historically the main concern for customers. Winkler said that by and large they are in separate places in the value chain and hence it is more of a vertical integration. CVS lies on the second spot for the provider of prescription drug benefits in the US and competes with larger rival Express Scripts Holding Co (ESRX.O). Aetna is number three on the list of health insurer, competing against UnitedHealth Group Inc (UNH.N), Anthem and Cigna to provide coverage for doctor and hospital visits.

December 16, 2017 - 03:57
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