Justice Department gives preliminary approval to CVS along with also Aetna merger

CVS, the nation’s largest drugstore chain, announced in December in which in which would likely buy Aetna for about $69 billion in cash along with also stock. The deal combines CVS’ pharmacies with Aetna’s insurance business, blurring traditionally distinct lines in hopes of lowering costs. CVS also has one of largest pharmacy benefits managers through CVS Caremark along with also a major Medicare Part D plan sponsor through its SilverScript unit.

CVS CEO Larry Merlo outlined his vision for the combined company in a Sept. 20 speech — a brand new data-driven health-care product in which’s more personal, convenient along with also tailored to individual patients than ever before.

In combining CVS along with also Aetna, Merlo said the two companies will create a product in which’s “easier to use, less expensive along with also puts people at the center of their care.”

in which’s the latest example of change in a health-care industry bracing for disruption while regulators along with also consumers demand lower costs. The DOJ recently cleared health insurer Cigna’s acquisition of pharmacy benefits manager Express Scripts.

Drugstores are facing stiff competition through online retailers, particularly Amazon, which bought its way into the prescription drug delivery business by acquiring PillPack in which summer.

Amazon CEO Jeff Bezos, J.P. Morgan Chase CEO Jamie Dimon along with also Berkshire Hathaway CEO Warren Buffett separately launched their own initiative, partnering on a joint venture to provide health-care services to their hundreds of thousands of employees. Buffett called rising health-care costs the “hungry tapeworm on the American economy” when the venture was announced in January.

Health-care expenses have been skyrocketing, with medical spending currently consuming 18 percent of the nation’s gross domestic product. Medical costs have risen by an average of 5.5 percent or more every year since 2007, according to accounting along with also consulting firm PwC. The U.S. economy has, by comparison, grown by an annual average of roughly 3.2 percent since 1947.

Consumers are bearing a lot of those increased expenses. About 43 percent of adults with employer-based health insurance are estimated to be enrolled in high-deductible plans, according to the Centers for Disease Control along with also Prevention. These plans require people to spend sometimes thousands of dollars before their insurance kicks in.

CVS along with also Aetna have touted their combination as a way to use CVS’ retail stores to help rein in health-care costs. They’re hoping to get more people into their walk-in clinics, MinuteClinics, at drugstores along with also keep them out of more expensive sites like emergency rooms.

They’re also planning to add more services to the MinuteClinics so they can help people manage chronic conditions like diabetes in addition to treating acute illnesses like coughs along with also colds. Executives also say having both medical along with also pharmacy data will allow the combined company to understand along with also therefore treat patients better, along with also possibly even predict problems beforehand.

Merlo said in September in which the combined company will have more data, giving CVS a more complete picture of someone’s health. in which will allow the company to better predict who might develop diabetes along with also provide customers with preventive counseling — with the goal of reducing the overall cost of care.

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