CVS Health to split pharmacy and insurance arms

CVS Health operates as the largest healthcare conglomerate in the United States with a valuation of $117 billion. On Wednesday, the company announced it will divide its operations into two distinct entities. This move separates the retail pharmacy network from the health insurance and benefits divisions.

The new entity named CVS Pharmacy will house the 9,000 physical pharmacies, in-store clinics, and the mail-order prescription division. The remaining organization will keep the CVS Health name. It will contain major insurance provider Aetna, the pharmacy benefits manager Caremark, and services that offer home visits and primary care to older adults.

Lawmakers and regulators have long pressured major healthcare players to reduce their market dominance. CVS Health, UnitedHealth Group, and Cigna control approximately 80% of the market. Critics argue this concentration contributes to rising medical costs. CVS Health generated over $400 billion in revenue in the previous year.

State-level political action has influenced the restructuring. Arkansas and Tennessee recently passed laws preventing large healthcare companies from managing prescription benefits while operating retail or mail-order pharmacies. Other states are considering similar restrictions.

Jeremiah Moore, a Republican state representative in Arkansas, sponsored the state bill. In an interview with Politico last week, he said the average American is tired of being pushed around by monopolistic companies. Moore described the situation as crony capitalism, noting that these entities have bent the rules to benefit their own bottom lines for far too long.

Federal legislation also targets the industry. Missouri Republican Senator Josh Hawley and Massachusetts Senator Elizabeth Warren introduced an antitrust bill. Hawley called the bill a major step toward restoring transparency in the healthcare system. He stated the goal is to make healthcare more affordable for every American.

David Joyner, chief executive and chair of CVS, will lead the healthcare solutions business. He stated that the current environment requires delivering more affordability, greater access, and a simpler experience for patients. The company previously opposed legislative efforts to break up the giant. A company spokesman argued such measures would open the door to private equity firms stripping the US healthcare system for parts. The planned breakup is scheduled to be completed in early 2028.