Fitch: CVS Health-Aetna 'prime example' of healthcare's focus on pricing power

CVS Health's $69 billion bid for Aetna is well in line with trends affecting the health insurance industry, according to Fitch Ratings.

Here are four things to know.

1. On Dec. 3, CVS Health inked a definitive merger agreement to acquire all outstanding shares of Aetna. Fitch Ratings analysts wrote while "healthcare companies are benefiting from strong organic demand growth … there are increasing headwinds to profitability as consumers of healthcare products and services struggle to meet the financial burden. Over the past several years, strategic acquisitions have played an important role in adjusting business models to defend pricing power, with the transaction announced yesterday being a prime example."

2. Fitch Ratings analysts added mergers and acquisitions among healthcare providers, payers and pharmacy benefits managers are increasingly vertical. This is due to companies' value proposition, which is largely determined by their cost-cutting benefits for consumers.

3. Moody's Investors Service said a CVS Health-Aetna merger would have negative implications for other healthcare companies.

4. "A combined CVS/Aetna would enjoy certain advantages and synergies that would disadvantage its competitors, including other pharmacy benefit management companies. By combining with a major health insurer, CVS's PBM would offer a more integrated approach to managing total healthcare costs," according to Moody's Investors Service. "The CVS/Aetna merger would create a formidable competitor that, by virtue of its scale and strength, would disadvantage other pharmacy benefit management companies, including Express Scripts." 

More articles on payer issues:
What about CVS Health's PBM deal with Anthem? Still on, CVS CEO says
Why the CVS-Aetna deal could push Walmart to buy Humana
Behavioral care more likely to be out of network than physical care

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