PBS News Hour

JUDY WOODRUFF

There's a major shift happening in the health care landscape that could affect tens of millions of Americans. The largest health care players are merging and consolidating in a wave of big deals, particularly between insurance companies and the companies that negotiate prescription drug plans. When the dust clears, it could change where people get their care, how they get their drugs and how much choice they have. The biggest deal was just approved last week, a nearly $70 billion merger between CVS Health and Aetna, one of the country's largest insurers. CVS, in addition to owning almost 10,000 retail stores across the country, provides drug plans to more than 90 million people. This came after the Cigna insurance purchase of Express Scripts was approved for more than $50 billion. All of this as big players are watching the potential emergence of Amazon in this sector. Larry Merlo the chief executive of CVS Health. He came to Washington to discuss this today. And he joins me now. Larry Merlo, welcome to the "NewsHour." LARRY MERLO, CEO,

CVS Health

Thank you, Judy.

JUDY WOODRUFF

So, we can only assume that you and Aetna think this is good for your business. Why is it also good for American health consumers?

LARRY MERLO

Well, Judy, certainly, when you look across the health care landscape, there are many, many challenges today. And we have an opportunity to begin to transform an industry that has gotten way too complicated. It's hard for, you know, patients and consumers to, you know, access, navigate the health care system. And we know we can do a better job in terms of helping people achieve their best health at a lower cost.

JUDY WOODRUFF

How do you do that? How do you get prices down? Because, historically, what we have seen mergers in the health care industry have benefited the companies, but not necessarily the consumers.

LARRY MERLO

Well, Judy, there's a lot that you look at the landscape today, and the incidents of chronic disease, just as one example, today, about 60 percent of all Americans have one or more chronic diseases. We know their names, diabetes, hypertension, cardiovascular disease, asthma, mental illness. Those health care conditions are costing our health care system about 86 percent of the dollars that we're spending. And, at the same time, we can do a better job in terms of improving the outcomes that those patients are experiencing. So, we see an opportunity that, you look at Aetna as a health insurer. They have a tremendous amount of information about the members that they serve. Aetna describes it is as, what's the next best action for that particular member? But they don't have a good way with which to get that information to the member to create an action, change a behavior. So we see this combination coming together, where we can make that data actionable in terms of creating an outcome by the face-to-face engagement of a pharmacist or a nurse practitioner, just as a couple of examples.

JUDY WOODRUFF

So, in other words, information that Aetna, an insurance company, has can be shared with the pharmaceutical end of the business?

LARRY MERLO

If you look at an insurer today, the ways that they attempt to create that activation is, it's a telephone call, it's a faceless phone call. It may be a letter in the mail. We will be able to utilize our pharmacies with which to convey what Aetna is attempting to do either in a letter or a phone call by a trusted professional, someone that they know, the pharmacist they know and trust. And we have been able to demonstrate with some of the things that we have done in terms of improving the adherence of prescription medications, that we can make an impact in terms of improving one's health.

JUDY WOODRUFF

I mean, getting people to abide by the regimen that they have been given, is that it, and making sure they're taking their pills?

LARRY MERLO

In its simplest form, Judy, that is the crux of the opportunity, that we know there are many, many times that those care plans are not being followed, whether it's being adherent to their medications or, again, that patient with diabetes making sure that they're checking their what's known as A1C levels. And, oftentimes, the physician doesn't find that out until there's an unintended medical event, and the person has to be hospitalized because their blood sugar has gotten to a level that requires that medical intervention.

JUDY WOODRUFF

So, potentially better, some better health outcomes. But you made a pretty ambitious statement when this was announced. You said CVS is going to lead the change that's needed in American health care. But we know prescription drug prices, as big as they, are only, what, 10 percent of the total cost of American health care. So, 10 percent, it's -- it's not insignificant, but that's not the whole picture.

LARRY MERLO

Yes, but, Judy, it goes well beyond that. We have been talking a lot about, we're seeing the consumerism of health care. And we have a lot of discussions about, when is someone a patient of health care, when is someone a consumer of health care? There's no question that, when you're in the physician's office in the exam room or at the hospital, no question about being a patient under the direct supervision of a physician. You're counting on he or she with which to diagnose, treat, create that plan. But we're leaving too much up to what happens with the individual, where they now become that consumer of health care, where they're now responsible for following that care plan, accessing the resources that they need. And that's where we see an opportunity to play an important role in terms of helping people achieve their best health. And in doing so, we know that we can reduce the cost of care today.

JUDY WOODRUFF

These questions I'm putting to you are being raised by a lot of folks who study the health care world. And they look at it and they say, these mergers mean they're going to be fewer players, fewer choice for people. And so they're expressing worry on the part of Americans that they're going to have the say that they need to have in their own health care, and especially in the cost of health care.

LARRY MERLO

Yes, Judy, it's a very interesting dynamic, in that the opportunities that we see available to us that we believe we can make broadly available in the market -- certainly, CVS and Aetna creates the scale with which we will be able to make investments to lead this transformation. But we have every plan to make many of these products and services broadly available in the marketplace.

JUDY WOODRUFF

Can you make a projection in terms of how much prescription drug prices are going to go down in the next five years, 10 years?

LARRY MERLO

We have made a dent in that cost curve. There is certainly much more that can be done. And I think one of the big opportunities -- there are many studies out there that people simply not taking their medications as prescribed is causing our health care system an additional cost of about $300 billion every year because of what the drug represents in terms of improving one's health, and when they're not taking it, the unintended event.

JUDY WOODRUFF

Larry Merlo, CEO of CVS Health, about to be part of one of the major mergers in the health care world, thank you very much.

LARRY MERLO

Thank you, Judy.