The Hospital: Life, Death, and Dollars in a Small American Town

by Brian Alexander

Insurance companies, drugmakers, and suppliers were not going to stand by and watch as hospitals formed giant corporations without responding. So drug giant CVS—which, in addition to its omnipresent stores, ran the nation’s largest pharmacy benefit manager (PBM) operation, CVS Caremark—bought out insurance giant Aetna for $69 billion. Aetna had earlier acquired Prudential Healthcare. As a Columbus Dispatch investigation showed, CVS Caremark used its consolidated power against small pharmacies in much the same way ProMedica did against St. Luke’s. CVS, which ran the prescription operations for three of Ohio’s managed care plans, reduced plan reimbursements for drugs sold by smaller stores. CVS then sent those stores letters warning of impending financial distress due to the lower reimbursements CVS itself was handing out. CVS offered to relieve that distress by buying out the small stores. (In response to the Columbus Dispatch investigation, CVS and another PBM, OptumRx—part of the Optum insurance giant—sued Ohio Medicaid to prevent the release of information showing they’d charged the Medicaid program $224 million more for dispensed drugs than they had actually paid out to pharmacies.)