Health and Science

CVS CEO Merlo gets personal with new data-driven health-care model in Aetna merger 

Key Points
  • CVS Health CEO Larry Merlo outlined his vision for a combined company with health insurer Aetna.
  • The $69 billion deal, announced in December, is awaiting federal antitrust approval.
  • The company expects the deal to close at the beginning of the fourth quarter.
Larry Merlo
Cameron Costa | CNBC

CVS Health's $69 billion merger with health insurer Aetna will create a new data-driven health-care model that's more personal, convenient and tailored to individual patients than ever before, CVS CEO Larry Merlo said Thursday.

Merlo is, in a way, disrupting and rewriting the business model for his drugstore chain before someone else does.

Announced in December, the deal is awaiting antitrust approval from the Department of Justice. The company expects it to close at the beginning of the fourth quarter.

The health-care industry is ripe for change, with consumers frustrated with rising costs and new entrants eyeing an opportunity to upend established practices. Amazon bought its way into the prescription drug space earlier this year with its acquisition of PillPack, a company that organizes and ships packages of medications to patients.

Without calling out Amazon or PillPack by name, Merlo touted CVS' superior customer service. He was speaking to business and community leaders at Town Hall, a civic forum in Los Angeles.

"Online and mail-order pharmacy has existed for many years, and CVS Health dispenses millions of prescriptions this way for patients each week," he said in prepared remarks obtained by CNBC. "But our delivery model goes well beyond that foundation."

CVS already provides in-home infusion services for customers, allows people to refill prescriptions through an app and pick them up at one of its nearly 10,000 stores and delivers medication directly to patient's homes with an electronic prescription from their doctor, he said.

In combining CVS and Aetna, Merlo said they'll create a model that's "easier to use, less expensive and puts people at the center of their care." The company will focus on three pillars: making health care local and simple and improving health.

Nearly 70 percent of Americans live within three miles of a CVS pharmacy, he said. With that in mind, the combined company can offer many options for people to access care, whether at CVS' stores and MinuteClinics, their homes or through digital services.

CVS and Aetna can coordinate patients' care, Merlo said, hinting the combined company may work with hospitals and physicians' electronic medical records to help patients understand and execute their care plans.

In terms of costs, the combined company will have more data, giving CVS a more complete picture of someone's health, Merlo said. That will allow the company to better predict who might develop diabetes and provide customers with preventive counseling, educate people with diabetes on how to lose weight and eat better, as well as help patients monitor blood glucose levels with text messages that alert them when the results look concerning.

"We have to believe that health care can work better, that millions more of us can get a better chance at achieving our best health. To make that vision a reality, change is necessary," he said. "We will challenge and disrupt the status quo, and help create a better, more effective and more affordable health care system."

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