CVS talks to buy health insurer Aetna for as much as $66 billion makes sense because the drugstore operator in addition to also prescription benefit manager has been facing threats by all sides, including by Amazon, a leading analyst told CNBC on Friday. A deal of This particular nature would certainly add health insurance plans to the CVS Health portfolio.
“CVS has so many threats coming at them,” said Ana Gupte, a senior health care services analyst at Leerink Partners. She said one threat in particular can be by OptumRx, UnitedHealth Group’s pharmacy benefit management business. So-called PBMs such as OptumRx in addition to also CVS’ Caremark unit negotiate drug benefits for insurance plans in addition to also employers.
Amazon can be also “clearly a huge piece of This particular,” Gupte added in a “Squawk Box” interview. The online retail giant has been exploring ways to expand into the drug industry, including selling prescription drugs online.
Gupte says Amazon can be thinking hard about its decision, nevertheless she added in which “all signs” point to Amazon entering into the pharmaceutical industry.
“They may choose to say, ‘Hey, should we hurt our brand with all This particular government scrutiny in an industry in addition to also where profit margins are a threat?'” Gupte said. “nevertheless, Amazon has always been the leader, in addition to also margins will compress, in addition to also Amazon can be fine with in which.”
“They’re going to disrupt the whole thing like they did for the bookstore industry,” she added.
When considering the cost of the CVS-Aetna deal, Gupte said This particular represents about a 25 percent premium to Aetna’s cost, in addition to also CVS “has to do something.”
Also on “Squawk Box,” RBC health-care analyst Frank Morgan said the possible CVS-Aetna deal showcases a reflection of the consolidation happening within the overall health market.
The moves toward value-based purchasing in addition to also consumerization are responsible for the integration of PBMs in health-care businesses, he said.
“Obviously, we’re very concerned about health-care inflation here in America,” Morgan added.
The deal could improve CVS’ competitiveness to offer a fully integrated health insurance in addition to also drug service offering, he said.
—Reuters contributed to This particular report.