In an interview with Fox News Digital, Douglas Hoey of the National Community Pharmacists Association said separating CVS Pharmacy from its insurance business and Pharmacy Benefits Manager could improve competition and reduce costs.
CVS Health announced plans Tuesday to split its sprawling conglomerate into separate health insurance and pharmacy businesses, a move hailed by an industry expert as a potential way to cut costs for millions of Americans.
The separation is expected to be completed by the first half of 2028, creating two independent, publicly traded companies.
The healthcare solutions company, which will temporarily retain the CVS Health name, will include its insurance plans and pharmacy benefit manager (PBM) subsidiaries, including Aetna, CVS Caremark, CVS Specialty, Oak Street Health and Signify Health.
CVS Pharmacy, the company’s retail division, will include approximately 9,000 stores, its mail-order pharmacy business, MinuteClinic and technology services unit Health100.
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CVS Pharmacy, the company’s retail division, will have approximately 9,000 stores. (Joe Raedle/Getty Images, File/Getty Images)
Existing CVS Health investors will receive shares of both companies tax-free, according to the Woonsocket, Rhode Island-based company.
The announcement shook investors, sending CVS shares plunging nearly 13% Tuesday to levels not seen since the spring.
For independent pharmacies, however, the split could create a more level playing field against the retail pharmacy giant.
| Teleprinter | Security | Last | Change | Change % |
|---|---|---|---|---|
| CVS | CVS HEALTH CORP. | 79.96 | -11:45 a.m. | -12.53% |
An industry expert representing thousands of independent pharmacies told FOX Business the move could restore market competition, improve patient access to medications and potentially lower prescription drug costs if “CVS becomes a true partner with other pharmacies.”
“We think it will be good for competition, good for patients, lower prices, good for small businesses to be able to compete with these conglomerates,” said Douglas Hoey of the National Community Pharmacists Association (NCPA).
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A customer stands at the drop-off counter at a CVS Pharmacy store. (Joe Raedle/Getty Images, File/Getty Images)
As a standalone entity, the CVS retail pharmacy business could experience more store closures, Hoey added, noting the company’s track record of closing about 10% of its locations over the past five years due to underperformance.
“With the company splitting off to become CVS Pharmacy, my guess is they’re going to take a closer look at underperforming stores and want to close underperforming stores,” Hoey said. “The good news for patients is that most of the time.
“CVSs are located near other pharmacies. … And so when one closes, there’s usually another option, whether it’s an independent chain or another chain that patients can choose from.”
Hoey added that separation could help level the playing field in the pharmaceutical market, arguing that CVS’s competitive practices have contributed to the closure of independent pharmacies. Today, he said, only about a third of the country’s pharmacies are independent.
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A CVS MinuteClinic patient exam room in South Portland, Me. (Gabe Souza/Portland Press Herald via Getty Images, file/Getty Images)
“The independent pharmacies went bankrupt. Rite Aid declared bankruptcy. Walgreens is no longer a publicly traded company. They were taken off the stock market because they were bought out by private funds,” Hoey said.
“CVS is not only a competitor, but they decide how much their competitors pay. They also get to decide where patients can go to get their medications,” Hoey said.
Splitting the company would mean that CVS would not decide “who is the judge, jury and executioner for all the other pharmacies?” Hoey said.
CVS may have pursued the separation for two main reasons, Hoey said.
The move could unlock value for shareholders by separating its slower-growing, lower-margin retail pharmacy business from its faster-growing, more profitable healthcare divisions.
In a statement Tuesday, CVS said the restructuring would allow the company “to evolve into two companies that are more focused and profitable for stakeholders.”
A CVS pharmacist prepares vaccines at a store in Huntington Park, California. (Christina House/Los Angeles Times via Getty Images, File/Getty Images)
Hoey added that the split could also help the company get ahead of growing regulatory scrutiny over vertical integration, which allows companies to steer patients, dictate drug coverage and underpay competing pharmacies.
In 2025 and 2026, Arkansas and Tennessee, for example, passed laws prohibiting PBMs from owning retail pharmacies, citing potential conflicts of interest. Both measures, however, face ongoing federal legal challenges.
“CVS decides how much other pharmacies pay. They also decide where patients can go to get their prescriptions,” Hoey said.
“In some cases, they pay more than other pharmacies.”
However, in its legal challenge to the Tennessee law, CVS argued that PBMs operating in the state already comply with existing requirements that they “reimburse unaffiliated pharmacies at the same or higher rate as affiliated pharmacies, and prohibit PBMs from referring patients to affiliated pharmacies rather than unaffiliated pharmacies.”
As a standalone entity, the CVS retail pharmacy business could experience more store closures, Hoey says. (Paul Weaver/SOPA Images/LightRocket via Getty Images, File/Getty Images)
The NCPA added that while the split is a positive development, investors will continue to hold shares in both companies, which could incentivize shareholders to see the two companies favoring each other.
“We need more information on how they will be regulated,” Hoey said.
Additionally, CVS Specialty will remain under the company’s healthcare solutions division rather than its pharmaceutical business.
Hoey said that means its highly lucrative specialty mail-order operations, which deal with expensive drugs for cancer, multiple sclerosis and rheumatoid arthritis, as well as GLP-1 drugs like Ozempic, will remain a part of the PBM and insurance business.
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Therefore, potential conflicts of interest related to patient referrals and drug rebate agreements could remain a concern in the specialty drugs market.
“They should behave like a regular pharmacy, but we’ll see how that goes. We need more information on how they will be regulated,” Hoey said.
CVS did not immediately respond to FOX Business’ request for comment.
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