Aetna and CVS executives are not publicly talking about a possible merger, but the industry certainly is, especially on the heels of incoming competition from the likes of Amazon.
A merger would put Aetna in a better position to ward off competition from a potential Amazon Pharmacy. Google, Apple and Facebook are some of the other digital giants moving into the healthcare industry.
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Cleveland Clinic CEO Toby Cosgrove last week talked about the provider threat of Amazon moving into the prescription drug market.
"Without significant consolidation on the part of providers, it's going to put us at a disadvantage," Cosgrove said. "We move on a very small margin. We are concerned about major forces, Amazon, coming at us in purchasing."
With patient out-of-pocket spending for drugs growing tremendously, the entire supply chain needs to be evaluated in any review of drug costs, Steve Ubl, president and CEO of PhRMA said during last week's Medical Innovation Summit.
Aetna also faces competition from Anthem, which last week announced it was forming its own pharmacy benefit management company, IngenioRx, with CVS.
This was seen as a way for Anthem to compete with the nation's largest health insurer, UnitedHealth Group, which owns the PBM OptumRx, according to Bruce Japsen, a Forbes contributor.
"But for CVS to operate a PBM with Anthem, the No. 2 health insurer, while owning Aetna, the No. 3 insurer, would be highly unusual coming off a period of intense antitrust scrutiny of the health insurance industry," Japsen said.
The deal would give CVS access to more than 23 million Aetna members, while Aetna would gain data integration to steer it faster towards value and a consumer-centric focus, according to David Carder, managing director of the consulting firm Kotter International in Cambridge, Massachusetts.
"One of the critical things it would do for Aetna, it would push Aetna even further into a consumer-customer focus," Carder said.
On way this would happen would be for Aetna to be better able to keep track of prescription adherence.
"Members would be dramatically engaged to be healthy," he said.
Aetna and CVS would be a good fit, versus Amazon, he said.
Aetna, just coming off a failed merger with Humana, would need to convince federal regulators that the merger doesn't simply represent two industry behemoths coming together, but would be a plus for consumers.
"It could increase their ability to acquire new deals on drug prices linked to outcomes," Carder said.
Aetna and Humana couldn't go through because the argument for consumer benefit didn't work, he said.
"It comes back to the direct merger experience, the synergies that come from two firms: data and getting sharp around member and customer experience," Carder said.
"It's not positive news," said Tom Borzilleri, CEO InteliSys Health of San Diego.
The merger would not be good for consumers, he said.
"Basically the moves that are taking place by multiple stakeholders in this industry is to ward off competition from Amazon and others that are trying to get into the space," he said. "In the end patients are going to lose."
When PBMs create their own closed-loop networks, prices go up, he said. What's needed is price transparency, said Borzilleri, whose company provides those services.
However a report from EBN said CVS Caremark's overall drug pricing and usage trend shows in 2016, the PBM shaved its increase in prescription spending per member per month to its lowest point in four years. CVS Caremark reported a trend increase of just 3.2 percent, down from 5 percent in 2015.