CVS Health is reportedly in talks to buy health insurer Aetna to the tune of $66 billion – and according to the Wall Street Journal, the merger is a pre-emptive strike against Amazon’s potential move into the pharmacy market.
As retail merchandise sales have dropped, both CVS and its competitor Walgreens have been putting more resources into their pharmacy and health-care businesses. In June, federal antitrust regulators shot down Walgreens’ initial proposed merger with Rite Aid. Meanwhile, competition from pharmacy benefit management businesses, which control prescription drug programs for some health plans, has been getting more fierce, according to a health care services analyst. So CVS might now be inspired to find an edge through less traditional means.
Would this merger present antitrust concerns? Is this a bellwether for the healthcare and pharmaceutical industries, and what would that mean for consumers? And what is Amazon’s role in all of this?
Erik Gordon, professor at the University of Michigan’s Ross School of Business, where he studies the commercialization of technology and the biomedical industry