Pharmacy giant CVS Health has agreed to buy Aetna in a $69 billion blockbuster acquisition.
CVS already has Aetna's business as a pharmacy benefit manager.
A merger would also defend CVS and Aetna against competition from Amazon and health Insurers.
The mere possibility that Amazon will soon begin selling drugs has shaken up the market across the drug supply chain, from wholesalers to pharmacies. The deal would expand CVS's business beyond selling drugs and negotiating drug prices, to managing all aspects of a patient's health -- and could shift its storefronts to become medical hubs, rather than a space stocked with consumer goods that people can easily buy in other stores or online.
The transaction would protect the players against competition from health insurers such as UnitedHealth Group, that have brought the business of negotiating drugs in-house instead of buying services from a middleman. It will effectively cut out the middleman in negotiating drug prices for health insurers, since CVS is that middleman today, and lock in Aetna's medical members for the pharmacy management side of CVS's business.
While the health care space has undergone consolidation, it has also faced challenges. Last year, health insurance mega-mergers between Aetna and Humana and Anthem and Cigna did not impress the antitrust regulators. However, this time, a merger between companies that don't directly compete is thought by many to have a better chance.
Walgreens Boots Alliance or Walmart are possible acquirers of the health insurer Humana.