Recent Shakeups in the Healthcare Market

By Cameron Griffith

Since the beginning of 2017, there have been rumblings of enormous changes to the American healthcare industry. Between Trump’s campaign promise to “repeal and replace Obamacare” and recent indications that Amazon plans to enter the pharmacy space, consumers and corporations alike are still trying to figure out their place in the shifting landscape.

The most recent news, that CVS Pharmacy is in talks to acquire healthcare provider Aetna to the tune of $66 billion, was reported by the Wall Street Journal on Thursday. Following speculation of the proposed deal, Aetna stock surged 12 percent while CVS’s fell 5 percent. Analysts say the move is a logical one for the pharmacy chain, which has been positioning itself to become a healthcare provider for some time.

CVS already runs Aetna’s pharmaceutical benefits plan, and the proposed merger would create several other synergies for the new company. The larger CVS-Aetna Company would be able to command more authority when negotiating with large pharmaceutical companies, potentially securing lower prices for millions of existing customers in addition to improving overall quality of service and administration.

The move towards vertical integration comes as a response to potential new entrants into the pharmacy business. Just this past week, it was reported that Amazon has been approved as a wholesale pharmaceutical distributor in 12 states. Although Amazon has not commented on its intentions with regard to pharmaceuticals, the revelation sent stocks of various healthcare companies, including CVS, Walgreens, and Express Scripts into a dive Thursday. Investors fear Amazon’s reputation for displacing established giants and challenging old methods of business to consumer delivery.

There is no guarantee that CSV’s bid will go through, pending due diligence and regulatory approval from the department of justice. Nonetheless, the deal could spell a new norm for healthcare providers seeking efficiency in a broken system that lies in uncertainty between the Affordable Care Act and the American Health Care Act.