CVS Health, the largest U.S. health care conglomerate valued at $117 billion, announced plans to spin off its pharmacy chain from its health insurance and benefits businesses, ending an era when health care companies grew into vast conglomerates.
In its Wednesday announcement, CVS Health said it would spin off its 9,000 pharmacies, in-store clinics and mail-order operations into a company called CVS Pharmacy.
A second company will retain the CVS Health name and house major insurer Aetna and giant pharmacy benefits manager Caremark, as well as other companies that provide house calls and primary care to seniors.
The company has faced pressure from lawmakers and regulators over concerns that healthcare giants, including CVS Health, UnitedHealth Group and Cigna, have become too dominant, driving up medical costs. The three companies control around 80% of the market. CVS Health in particular generated more than $400 billion in revenue last year.
A political backlash against health care gigantism led Arkansas and Tennessee to pass laws aimed at preventing companies from handling prescription benefits and running retail and mail-order pharmacies.
Arkansas state Rep. 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 by the government or a monopolistic corporation.” »
He added: “For too long, they’ve taken advantage of these sick people, and that’s what I consider crony capitalism. They’re bending the rules to benefit their own bottom line.” Other states have proposed similar restrictions.
At the federal level, a bill introduced by Missouri Republican Sen. Josh Hawley and Massachusetts Sen. Elizabeth Warren proposes an antitrust crackdown.
Hawley described the legislation as “a major step toward restoring transparency and making health care more affordable for every American.”
David Joyner, CEO and president of CVS, will lead the healthcare solutions business.
“Our story is defined by proactive evolution to stay ahead of the future of health care, and in today’s environment, that means delivering more affordability, better access and a simpler experience,” Joyner said in a statement.
This marks a stark reversal from CVS Health’s previous opposition to legislative efforts to break up the healthcare giant, which a company spokesperson said would “open the door to private equity stripping the entire U.S. healthcare system.”
The announcement follows a series of acquisitions that have allowed CVS Health to expand into nearly every area of the healthcare system. It all started in 2018, when CVS and Aetna merged in a $70 billion deal. Health care competitors UnitedHealth and Cigna have also embraced the trend of combining an insurer, pharmacy benefits and mail-order business into a single operation.
CVS Health, however, fell short of investors’ growth expectations. At the end of 2024, its stock price fell to $44, but it has since rebounded. CVS Health is expected to dissolve in early 2028.
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