How CVS became a healthcare tyrant

Published in healthcare, concentrated corporate power, on Jan 27, 2021

Key to CVS’s power is its Pharmacy Benefits Manager (PBM), an odd yet critical business in American health care... PBMs are a very concentrated industry, with just three companies - including CVS’s Caremark - controlling 70% of the market. While PBMs are an odd industry that exists largely because American health care markets are immensely screwed up and our drugs don’t have credible public prices, the real problem is what happens when you combine a powerful PBM with a drug store chain.

CVS aquisitions since 1990:

  • 1990, CVS buys 490-store-chain People Drug Stores in the mid-Atlantic

  • 1997, CVS buys 2600-store-chain Revco D.S. across the midwest for $3.7 billion

  • 1998, CVS buys 200-store-chain in Michigan for $1.5 billion

  • 1999, CVS buys online drug store

  • 2002, CVS buys bought assets from bankrupt discount drug store chain Phar-Mor

  • 2004, CVS buys 1260-store-chain Eckerd stores, plus Eckerd Health Services mail order and $1 billion mail order pharmacy benefits management business, plus three distribution centers from J.C. Penney

  • 2006, CVS buys 700-stand-alone Sav-On and Osco drugstores from Albertson’s

  • 2007, CVS buys Caremark RX Pharmacy Benefits Manager (PBM) for $26.5 billion

  • 2008, CVS buys 521-store-chain Long Drug Stores for $2.9 billion, including Rx America, a PBM with more than 8 million members

  • 2015, CVS buys Target corporation’s pharmacy business

  • 2018, CVS buys Aetna health insurance for $69 billion

On monopoly

"A large steel plant might be more efficient than a small one, but ten steel plants managed by one legal entity isn’t necessarily more efficient than each plant having its separate legal ownership structure. In fact, it’s often worse, since distant management creates needless bureaucracy versus a local plant manager with the authority to just fix problems then and there."

- Matt Stoller, American Economic Liberties Project

Monopolies in the pharmaceutical industry has real consequences:

Very few people realize that the third leading cause of death in America is medical errors, at between 250,000 and 440,000 people a year. That’s a population the size of Reno, Nevada dying every single year.

Further reading