The talks are advanced and would likely see Aetna valued at between $200 and $205 a share and be comprised mainly of cash, the Journal reported.
The talks, like all deal discussions, could be delayed or ultimately fail, the Journal cautioned.
Aetna had a market capitalization of $59.27 billion after the report came out Thursday morning. Shares rose about 1 percent. CVS had a market capitalization of $77.2 billion as of Thursday morning, and its shares rose more than 2 percent on the report.
CVS and Aetna both declined to comment.
Woonsocket, Rhode Island-based CVS has been transforming itself into a health-care business for years, propelled by its acquisition of the Caremark pharmacy benefit manager platform in 2007. (A PBM typically is a third party that negotiates prescription drug benefits for a commercial health plan.)
This past quarter, CVS generated roughly 70 percent of its sales from its PBM business — up 8.1 percent from the quarter before.
An acquisition of an insurer like Aetna could give CVS more scale to bargain better prices for the prescription drugs it sells on its counters. It could fortify Aetna's insurance business by creating the ability to offer its insured cheaper copayments, presumably only in CVS stores. Its vast retail footprint could serve as a cost-effective distribution center, or locations for in-store clinics.
It comes as Amazon has been threatening to enter the drug industry in some fashion. With Amazon as a competitor, customers would have even less reason to go into CVS stores than they do now. Shoppers can now find cosmetic and household staples at other retailers and online, sometimes for a lower price.
Amazon recently told regulators it will use pharmacy licenses it obtained from Tennessee and Indiana to sell medical devices and supplies, not to sell prescriptions.
For Aetna, the deal would mark a change in strategy after its attempted tie-up with Humana was blocked by a federal court on antitrust grounds. A CVS deal would be a so-called vertical integration — an acquisition down a company's supply chain rather than "horizontal" — an acquisition of a direct competitor. Such deals are thought to be less threatening to antitrust authorities. Still, AT&T, which is making the largest recent attempt at vertical integration with its proposed $85 billion acquisition of Time Warner, has been sued by the Department of Justice to stop the deal.