State and federal lawmakers target pharmacy-industry consolidation
CVS Health said on Wednesday that it would place its pharmacy operations in a separate company called CVS Pharmacy. The new business would include 9,000 pharmacies, in-store clinics and the mail-order prescription business. A second company would retain the CVS Health name and house the insurer Aetna, the pharmacy benefits manager Caremark and other businesses that provide home visits and primary care to older people.
The announcement comes amid pressure from lawmakers and regulators who have raised concerns that dominant healthcare companies contribute to higher medical costs. According to The Guardian, CVS Health, UnitedHealth Group and Cigna control roughly 80% of the market. CVS Health generated over $400bn in revenue last year.
Arkansas and Tennessee have passed laws aimed at preventing companies from managing prescription benefits while also running retail and mail-order pharmacies. Other states have proposed similar restrictions.
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.”
At the federal level, Missouri Republican senator Josh Hawley and Massachusetts senator Elizabeth Warren introduced a bill proposing expanded antitrust enforcement against the largest healthcare companies. Hawley described the legislation as “a major step toward restoring transparency and making health care more affordable for every American.”
CVS Health’s expansion into a conglomerate followed a series of acquisitions. CVS and Aetna merged in a $70bn deal in 2018. UnitedHealth and Cigna also adopted structures combining insurance, pharmacy benefits and mail-order operations.
The announcement represents a reversal from CVS Health’s earlier opposition to legislative efforts to break up the company. A company spokesman said such efforts would “open the door to private equity stripping the entire U.S. healthcare system for parts.”
CVS Health did not meet investors’ expectations for growth. Its share price fell to $44 in late 2024, though it has since rebounded.
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,” Joyner said in a statement. The separation is planned for early 2028.