CVS Health has reportedly agreed to buy Aetna, the nation’s third-largest health insurer for $69-billion.
CVS is a lot more than a pharmacy. The Woonsocket-based company operates a giant retail chain – including 69 Rhode Island stores that sell everything from shampoo to potato chips.
CVS also operates walk-in Minute Clinics and home infusion services. And it runs one of the country’s largest pharmacy benefits managers, or PBMs, which negotiate drug prices on behalf of insurers.
The pharmacy chain’s expansion into the health care market, industry experts say, will take another leap forward with the purchase of the Hartford, Connecticut-insurer, Aetna.
The deal first reported by The Wall Street Journal, comes at a time when pharmacy companies are facing stiff competition from online retailers like Amazon.
Bob Laszewski, a Washington, D.C. – based consultant, says CVS’s strategy is to morph into a very different kind of company.
“I think this is a strategy to morph into a more integrated health care company and get out of the potato chip business,” Laszewski said. “Long-term this raises questions about how much confidence they have in their retail business."
Consumers are buying more of their pharmaceuticals online – a trend Laszewski and other say poses a major threat to CVS’s retail chain.
What kind of business CVS becomes will no doubt have a big impact on Rhode Island, where the company employs about 8,000 people. Many of CVS’s employees in the state work in its retail stores.
CVS did not respond to a request for comment about the Aetna deal.