CVS Health plans to divide its business into two companies, separating its large retail and clinic operation from its health insurance and pharmacy benefit businesses, according to sources close to the company and news reports. The move would place more than 9,000 drugstores and retail health clinics in one company, while Aetna health insurance and Caremark pharmacy benefit operations would form the other.
The reported restructuring comes as vertically integrated health care companies face increasing scrutiny from regulators, lawmakers and the public. These companies combine multiple roles in the health system, including providing care, managing prescription benefits and paying medical claims. Critics argue that such arrangements can make it difficult to determine how prices are set and how business decisions affect patients, employers and other insurers.
A separation of CVS’ major businesses
CVS Health’s reported plan would divide operations that currently sit under one corporate structure. The retail side would include the company’s pharmacy stores and health clinics. The second business would contain Aetna, the insurer, and Caremark, the pharmacy benefit operation. The available reports did not provide a timetable for completing the separation or describe the final corporate structure.
| Reported company | Businesses included |
|---|---|
| Retail and care company | More than 9,000 drugstores and retail health clinics |
| Insurance and pharmacy benefit company | Aetna health insurance and Caremark pharmacy benefit operations |
The announcement would come against a broader political backdrop in which lawmakers from both parties have criticized concentration across the health care industry. U.S. Sens. Elizabeth Warren, D-Mass., and Josh Hawley, R-Mo., introduced the Break Up Big Medicine Act earlier this year. They said the proposal was intended to address what they described as widespread consolidation that raises prices, reduces competition and strengthens the influence of large corporate health systems.
“The only way to make health care more affordable is to break up these health care conglomerates.”
That argument reflects a central question surrounding the CVS plan: whether separating businesses will reduce the conflicts and complexity critics associate with vertical integration, or simply reorganize them under different corporate arrangements. The reported split, by itself, does not establish how prices, coverage decisions or pharmacy contracts would change for consumers. It does, however, signal that pressure on large health care conglomerates is affecting the structure of one of the nation’s most prominent companies in the sector.
What the plan could mean for scrutiny of health care consolidation
Mark Cuban, an investor and entrepreneur who co-founded the Mark Cuban Cost Plus Drug Company, has also argued that vertically integrated insurers can influence medical providers and pharmacies they own or operate. He has called for the largest insurance companies to be broken up and criticized their use of numerous subsidiaries. His comments have added to a public debate over whether corporate ownership across insurance, pharmacies and care delivery can contribute to higher costs.
“Break up the biggest insurance companies.”
CVS Health could not be reached for comment Tuesday night, according to the source account. Until the company provides additional details, key questions remain about how the two businesses would operate, how their relationships would change and what protections would apply to patients and customers during the transition. The plan nevertheless places CVS at the center of a national debate over whether health care companies should be allowed to combine coverage, pharmacy benefits and direct care under one corporate roof.
