Anthem-CVS deal raises questions for Aetna

CVS pharmacy
Anthem's announcement that it will partner with CVS on a new PBM venture likely means that the speculated merger between CVS and Aetna is unlikely to materialize. (Mike Mozart/CC BY 2.0)

Anthem’s plan to launch its own pharmacy benefits manager will not only alter the PBM landscape, it will also likely impact one of its competing insurers.

Aetna has a long-term PBM contract with CVS Health, which will come up for renewal in 2020—the same year that CVS’ newly announced contract with Anthem will take effect.

RELATED: Anthem teams with CVS to launch new pharmacy benefits manager

Months before Anthem made its announcement, CEO Mark Bertolini said during Aetna’s first-quarter earnings call that the insurer and CVS were discussing “how we could work closer together,” both on the pharmacy side and in local care delivery. Those comments led some to speculate about a potential merger between the two entities.

But while Aetna was still attempting to acquire Humana, the larger insurer’s leaders had hinted at taking PBM operations in-house since Humana already does so. Those plans appear to have ended after the transaction fell through.

Fast forward to Wednesday, when Anthem executives noted that the company will receive a “best in class” deal with CVS—raising questions about the future of CVS’ relationship with Aetna.

Anthem likely brings more prescription volume to CVS than Aetna does, Leerink Partners analyst Ana Gupte said in a research note. Ultimately, “the speculated merger between CVS and [Aetna] is unlikely at this point,” she concluded.

Neither Aetna nor CVS responded to requests for comment about whether they will renew their deal in 2020.

Anthem’s move also strikes another blow to the standalone model of PBMs. That model has already been disrupted by the success of UnitedHealth’s acquisition of Catamaran—which became its in-house PBM OptumRx—and speculation about Amazon’s possible entry into the market. Express Scripts, the largest standalone PBM, has also been the target of a lawsuit from Anthem accusing it of withholding prescription drug savings.

Since Express Scripts has lost its contract with Anthem, Gupte predicted it will seek “even more aggressively” to partner with Amazon if it does decide to get into the prescription drug sales business.

UnitedHealth is also mulling how it will respond if Amazon becomes a player in the drug supply chain. On the company’s third-quarter earnings call on Tuesday, OptumRx CEO John Price said the PBM is “channel agnostic” when it comes to choosing partners in the market and is “open to new distribution partners.”

Gupte said she interprets that to mean that OptumRx isn’t looking for a preferred strategic alliance outside of a mail-order fulfillment contract with Amazon.