CVS To Split Up Pharmacy and Health Benefits Businesses

CVS Health has announced its intention to separate its drugstores into a distinct company, according to a statement released on November 4. The split will result in two separate businesses: one focusing on healthcare operations and the other comprising its 9,000 pharmacies, along with additional services. This decision comes amidst scrutiny from states, which have expressed concerns that CVS's dual role as a manager of pharmacy benefits and an operator of retail pharmacies could create conflicts of interest.

These concerns may lead to steering patients towards CVS's own drugstores and paying competing pharmacies less for filling prescriptions. In the past two years alone, Arkansas and Tennessee have enacted laws to prevent Pharmacy Benefit Managers like CVS from owning or operating pharmacies within their states. CVS had previously argued that splitting off its pharmacies would force it to close drugstores and increase expenses for consumers.

On November 4, CVS Health CEO David Joyner confirmed that political and regulatory pressure influenced the decision. He further stated that the separation would enable CVS to innovate and move at a quicker pace. The healthcare business, overseen by Joyner as both chairman and CEO, will focus on Aetna, CVS Caremark, Oak Street Health, and Signify Health.

The new pharmacy company, named CVS Pharmacy, will be led by CVS Health group president Prem Shah. The division is projected to commence in the first half of 2028.