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CVS, Aetna merger OK'd by feds, a $69 billion deal to reshape health care

CVS plans to buy Aetna
CVS to buy insurance giant Aetna 02:10

The proposed $69 billion merger between the drugstore chain CVS Health and the health insurer Aetna is getting a greenlight from the U.S. Department of Justice, with some conditions.

The Justice Department on Wednesday approved the deal on the condition that Aetna moves ahead with its plan to sell its Medicare Part D prescription drug plan business, resolving some anti-monopoly issues. Aetna said last month it would sell the business for an undisclosed amount. 

CVS announced plans to buy Hartford, Connecticut's Aetna late last year. The deal is expected to give the Woonsocket, Rhode Island, drugstore chain a bigger role in health care, with the companies combining to manage care through CVS stores, clinics and prescription drugs.

The merger with the nation's third-largest insurer will push one of the country's biggest drugstore chains more forcefully in a direction it has been heading for years, according to Wall Street analysts. CVS, which stopped selling tobacco products in 2014 to further burnish its image as a care provider, already runs about 1,100 clinics and has been steadily expanding the health care it offers.

Aetna CEO on proposed $69 billion acquisition by CVS 05:26

The clinics started off as a place to treat basic health care needs like sinus infections or strep throat. Gradually, CVS added services like blood draws or monitoring of chronic conditions such as high blood pressure and diabetes. Expect that trend to continue as the drugstore switches more from selling products in its stores to services that can't be bought online, where retailers face formidable competition from the likes of Amazon.

"I think over time you're going to see less of that front-store retail and more health care services in their stores," Jeff Jonas, a portfolio manager for Gabelli Funds who follows drugstores, told the Associate Press last December when the deal was announced.

The mammoth acquisition pairs a company that runs more than 9,700 drugstores with an insurer covering around 22 million people. CVS Health Corp. is also one of the nation's biggest pharmacy benefit managers, processing more than a billion prescriptions a year for clients like large employers and insurers including Aetna Inc.

Analysts say the combined company could add more clinics and expand in-store services to include eye care or maybe centers for hearing aids. That could gradually turn CVS into a one-stop-shop for health care, a place where patients can get a hearing aid checked, then see a nurse practitioner and pick up prescriptions.

-- This is a developing story.

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