The CVS–Aetna Merger: Another Large Bet on the Changing U.S. Health Care Landscape
Authors: Austin B. Frakt, Craig Garthwaite
Journal: Annals of Internal Medicine (2018)

Ideas and Opinions3 April 2018The CVS–Aetna Merger: Another Large Bet on the Changing U.S. Health Care LandscapeAustin B. Frakt, PhD and Craig Garthwaite, PhDAustin B. Frakt, PhDVA Boston Healthcare System, Boston University School of Public Health, and Harvard T.H. Chan School of Public Health, Boston, Massachusetts (A.B.F.) and Craig Garthwaite, PhDNorthwestern University Kellogg School of Management, Evanston, Illinois (C.G.)Author, Article, and Disclosure Informationhttps://doi.org/10.7326/M17-3319 SectionsAboutFull TextPDF ToolsAdd to favoritesDownload CitationsTrack CitationsPermissions ShareFacebookTwitterLinkedInRedditEmail Through mergers and acquisitions, health care organizations are making large bets about the future of the U.S. medical landscape and the types of organizations that can ultimately succeed in it. In particular, there's been a recent uptick in vertical integration, such as hospitals buying physician practices and insurers buying providers (1). Emblematic of these changes is the recently announced merger of CVS and Aetna, which would be among the more interesting recent turns in the reorganization of U.S. health care.CVS is a pharmacy chain, a dominant pharmacy benefit manager (PBM), and runs more than 1000 retail clinics. Aetna is ...References1. Johnson G, Lyon ZM, Frakt A. Provider-offered Medicare Advantage plans: recent growth and care quality. Health Aff (Millwood). 2017;36:539-47. [PMID: 28264957] doi:10.1377/hlthaff.2016.0722 CrossrefMedlineGoogle Scholar2. Garthwaite C, Scott Morton F. Perverse market incentives encourage high prescription drug prices. ProMarket Blog. 1 November 2017. Accessed at https://promarket.org/perverse-market-incentives-encourage-high-prescription-drug-prices on 18 December 2017. Google Scholar3. Lavetti K, Simon K. Strategic Formulary Design in Medicare Part D Plans. Working Paper no. 22338. Cambridge, MA: National Bureau of Economic Research; 2016. Google Scholar4. Starc A, Town RJ. Internalizing Behavioral Externalities: Benefit Integration in Health Insurance. Working Paper no. 21783. Cambridge, MA: National Bureau of Economic Research; 2015. Google Scholar5. Dranove D, Ody C, Starc A. A Dose of Managed Care: Controlling Drug Spending in Medicaid. Working Paper no. 23956. Cambridge, MA: National Bureau of Economic Research; 2017. Google Scholar6. Gaynor M, Town RJ. Competition in Health Care Markets. Working Paper no. 17208. Cambridge, MA: National Bureau of Economic Research; 2011. Google Scholar7. Ashwood JS, Gaynor M, Setodji CM, Reid RO, Weber E, Mehrotra A. Retail clinic visits for low-acuity conditions increase utilization and spending. Health Aff (Millwood). 2016;35:449-55. [PMID: 26953299] doi:10.1377/hlthaff.2015.0995 CrossrefMedlineGoogle Scholar Author, Article, and Disclosure InformationAffiliations: VA Boston Healthcare System, Boston University School of Public Health, and Harvard T.H. Chan School of Public Health, Boston, Massachusetts (A.B.F.)Northwestern University Kellogg School of Management, Evanston, Illinois (C.G.)Disclaimer: The contents do not represent the views of the U.S. Department of Veterans Affairs, the U.S. government, Boston University, Harvard University, or Northwestern University.Disclosures: Authors have disclosed no conflicts of interest. Forms can be viewed at www.acponline.org/authors/icmje/ConflictOfInterestForms.do?msNum=M17-3319.Corresponding Author: Austin B. Frakt, PhD, VA Boston Healthcare System, 150 South Huntington Avenue (152H), Boston, MA 02130; e-mail, [email protected]edu.Current Author Addresses: Dr. Frakt: VA Boston Healthcare System, 150 South Huntington Avenue (152H), Boston, MA 02130.Dr. Garthwaite: Northwestern University Kellogg School of Management, 2001 Sheridan Road, Evanston, IL 60618.This article was published at Annals.org on 9 January 2018. PreviousarticleNextarticle Advertisement FiguresReferencesRelatedDetails Metrics Cited byFinancial Profit in Medicine: A Position Paper From the American College of PhysiciansRyan Crowley, BSJ, Omar Atiq, MD, and David Hilden, MD, for the Health and Public Policy Committee of the American College of PhysiciansTechnology Can Augment, but Not Replace, Critical Human Skills Needed for Patient CareDissecting drug pricing: Supply chain, market, and nonmarket trends impacting clinical dermatologyService innovation is urgent in healthcare 3 April 2018Volume 168, Issue 7Page: 511-512KeywordsAdverse reactionsDrug pricesDrugsForecastingHealth careHospitalizationsInterleukinsMedicareMotivation ePublished: 9 January 2018 Issue Published: 3 April 2018 Copyright & PermissionsCopyright © 2018 by American College of Physicians. All Rights Reserved.PDF downloadLoading ...