CVS Health has proposed to buy health insurer Aetna for $200 a share or more, according to news reports. If the deal goes through, CVS would become the first healthcare triple threat: a pharmacy, a pharmacy benefit manager and an insurer. The Wall Street Journal first reported the proposed deal. Acquiring Aetna would give CVS even more scale to bargain better prices for the prescription drugs it sells, according to reports. It could also help Aetna's insurance business by creating the ability to offer its insured members cheaper co-payments, presumably only in CVS stores. CVS’ retail footprint could also serve as a cost-effective distribution center, or locations for in-store clinics.
Total Retail’s Take: It's not surprising that the impetus behind this proposed deal is Amazon.com. After all, the Seattle-based retail behemoth — which surged to a market capitalization of $530 billion on Friday — has been intimating that it may enter the multibillion dollar pharmaceutical dispensing business since May. Amazon has also already received approval for wholesale pharmacy licenses in at least 12 states and has said it will make a decision by Thanksgiving on whether to enter the industry. With Amazon potentially selling prescription drugs, consumers would have even less reason to go into CVS stores than they do now. By owning an insurer such as Aetna, CVS creates a field more difficult for Amazon to play in. Beyond Amazon, the move would be a logical progression for CVS, which has been transforming itself into a healthcare business for years. It acquired its Caremark pharmacy benefit manager platform in 2006, for example, and in 2014 it changed its name from CVS Caremark to CVS Health. What’s more, CVS and Aetna have already begun to test a relationship, having signed a contract to work together in 2010.