CVS’ recent decision to divide its retail pharmacies from its insurance and pharmacy-benefit businesses has raised hopes of consumer savings as Americans continue to reel from high costs of living.
The breakup of one of the biggest health-care conglomerates in the US has the potential to bring about lower costs on some services, though that remains to be seen, experts told The Post.
“It is potentially a good thing, however, it will depend on how the regulators enforce the separation,” said Doug Hoey, CEO of the National Community Pharmacists Association.
About 25% of the country has their prescriptions managed by CVS, with about 10% receiving direct insurance services from the company.
CVS Health will keep its insurance company, Aetna, and its pharmacy benefits manager, Caremark under one roof. Meanwhile, CVS Pharmacy will include the company’s retail division, with 9,000 storefronts and mail-to-order infrastructures in another company, with the split-up going into effect by early 2028.
Will drug prices at CVS pharmacies go down?
The change in the company’s supply chain could allow some wiggle room for competition and might disincentivize the pharmacy benefits manager, Caremark, from trying to maximize profits from CVS pharmacy — translating to some savings on drug costs.
“Caremark pays its affiliated CVS retail pharmacies, which results in higher premiums in cost sharing for patients,” Emma Freer, a senior healthcare fellow at the American Economic Liberties, told The Post.
“So because they’re spinning off their retail pharmacies under this proposal, it would foreclose that particular avenue for that type of gaming.”
In a statement, CVS maintained there has always been a firewall between the two entities and that they don’t influence each other.
Dr. Mariana Socal, a Johns Hopkins professor who studies the pharmaceutical market, told The Post she doesn’t see prices going down because she doesn’t believe this split is actually separating Caremark and CVS.
“There is no change,” she predicted.
Will certain types of drugs be affected more than others?
CVS Health is keeping its specialty pharmacy services in-house. CVS typically doles out prescriptions for cancer drugs, multiple sclerosis treatment, hormonal therapy and weight-loss drugs at the specialty sites, carrying a higher price tag.
Freer, Hoey, and Socal believe the company’s split could actually bring higher specialty drug prices.
“The specialty pharmacy may use this new well to help replace some of those profits and revenue that might be dried up with these new regulations,”Hoey said.
Will Aetna insurance costs go down?
Socal does not see premiums going down, saying what might have brought costs down would have been separating Caremark from Aetna.
CVS agreed to buy Aetna in 2017 for $69 billion, and at the time there was already growing scrutiny over the relationships between insurers and pharmaceutical benefit managers.
Nearly 10 years later, that scrutiny has only grown. The Department of Labor finalized a rule last week that would require pharmacy benefits managers to share cost data and payments with drugmakers.
Could things change between now and 2028?
CVS Health CEO David Joyner said on CNBC that came about in part because of growing lawmaker scrutiny of healthcare conglomerates and how they profit off owning large portions of the supply chain.
“Companies need to navigate the regulatory environment, and we are setting ourselves up for success,” he said.
Hoey told The Post it’s ultimately up to regulators to see if the split-up yields benefits for consumers.
