CVS Health to split pharmacy chain from health insurance

CVS Health to split pharmacy chain from health insurance CVS Pharmacy will be separate from CVS Health, housing major insurer Aetna and benefits manager Caremark

CVS Health, the largest US healthcare conglomerate valued at $117bn, has announced its plans split off its pharmacy chain from its health insurance and benefits businesses, ending an era in which healthcare companies grew into massive conglomerates.

In their announcement on Wednesday, CVS Health said they will split off its 9,000 pharmacies, in-store clinics and mail order prescription business into a business named CVS Pharmacy.

A second company will keep the name CVS Health and house the major insurer Aetna and the giant pharmacy benefits manager Caremark, along with other businesses that provide home visits and primary care to older people.

The company has come under pressure from lawmakers and regulators over concerns that the healthcare giants, including CVS Health, UnitedHealth Group and Cigna, have become too dominant, leading to higher medical costs. The three companies control roughly 80% of the market. CVS Health in particular generated over $400bn in revenue last year.

A political pushback against healthcare gigantism has led Arkansas and Tennessee to pass laws aimed at preventing the companies from managing prescription benefits and running retail and mail-order pharmacies.

Arkansas state representative Jeremiah Moore, a Republican who sponsored the state’s bill, told Politico last week : “The average American citizen is really tired of being pushed around and bullied, whether it be from the government or a monopolistic company.”

He added: “For far too long, they’ve taken advantage of these sick people, and it’s what I consider to be crony capitalism. They’re bending the rules to benefit their own bottom line.” Other states have proposed similar restrictions.

At the federal level, a bill introduced by Missouri Republican senator Josh Hawley and Massachusetts senator Elizabeth Warren proposes an antitrust crackdown.

Hawley has described the legislation as “a major step toward restoring transparency and making health care more affordable for every American.”

David Joyner, CVS’s chief executive and chair, will run the healthcare solutions business. “Our history is defined by proactively evolving to stay ahead of what’s next in healthcare, and in today’s environment, that means delivering more affordability, greater access and a simpler experience,” said Joyner in a statement.