Aetna shareholders will own about 22 percent of the combined company, while CVS shareholders will own the remainder, the sources said. Three Aetna directors, including Aetna’s Chairman and CEO Mark Bertolini, will join CVS’s board of directors, the sources added.
The sources requested not to be identified because the deal has not yet been announced. CVS and Aetna did not immediately respond to requests for comment.
The deal comes as healthcare payers and pharmacies are responding to factors including the Affordable Care Act, rising drug prices and the threat of competition from online retailers such as Amazon.com Inc.
CVS plans to use its low-cost clinics to eventually save more than $1 billion per year on health care costs for Aetna’s roughly 23 million medical members, sources have said.
A combined insurer and PBM will also likely be better placed to negotiate lower drug prices, and the arrangement could boost sales for CVS’s front-of-store retail business.
The company expects to invest billions of dollars in the coming years to add clinics and services, largely financed by diverting funds away from other planned investments.
That could eventually cut costs substantially, with the clinics serving as an alternative to more expensive hospital emergency room visits.
Meanwhile, deeper collaboration between Aetna’s insurance business and CVS’s PBM division could drive down drug costs by adding clients and boosting the PBM’s leverage with drugmakers.
Independent PBMs have long been criticized for potential conflicts of interest with insurance company clients, because they could potentially keep cost savings from drug negotiations rather than passing them on to patients.
Aetna patient visits to CVS stores for health care and prescriptions could also boost front-of-store sales, which like those at many retailers have fallen in recent quarters amid competition from online sellers.
Health insurers meanwhile have sought to cut costs amid steep prescription drug price rises and requirements to care for even the sickest patients under the Affordable Care Act.
Aetna last year tried to buy rival Humana to gain leverage to control costs, but U.S. antitrust regulators shot down that transaction and a proposed merger between Anthem and Cigna.
Analysts have said the CVS-Aetna deal could prompt other healthcare sector mega-mergers, as rivals scramble to emulate the strategy.
It could spur a merger between Walgreens Boots Alliance Inc and Humana Inc, or between Humana and Wal-Mart Stores Inc, Ana Gupte, analyst at Leerink Partners, said recently.