CVS Health plans to lay off 2,900 employees nationwide to cut $2 billion in costs. A CVS Health representative explained that downsizing is a result of ndustry disruptions, regulatory pressure, and ever-changing consumer needs. 

Positions such as salespersons, storekeepers, pharmacists, clerks, and dispatch office workers will not be affected.

The Federal Trade Commission (FTC) filed an antitrust lawsuit against the three largest prescription drug benefit managers (PBMs)—Caremark Rx, Express Scripts (ESI), and OptumRx—along with their group purchasing organization (GPO) affiliates. The lawsuit alleges that these entities engaged in exclusionary and unfair rebate practices that kept insulin list prices artificially high and limited patients’ access to lower-priced insulin.

The FTC accused CVS Health’s Caremark, Cigna’s ESI, United Health Group’s Optum, and their GPOs of creating an anti-competitive pharmaceutical purchasing market by setting restrictive conditions that impeded patients’ ability to obtain more affordable insulin.

 As a result, vulnerable patients, particularly those with high deductibles and coinsurance, end up paying nearly $140 out of pocket for insulin. Since rebates are not passed on to patients, they are burdened with excessively high list prices, while PBMs and GPOs profit from the rebates and fees.

CVS Health is also considering separating its retail and insurance divisions due to growing investor pressure. The proposed separation would spin off the insurance business into two public companies, potentially undoing CVS’s $70 billion acquisition of Aetna in 2017. The company is still deliberating on whether its PBM unit should be placed under the retail or insurance division if the breakup occurs.

These discussions arise at a time when CVS is grappling with operational challenges and declining revenues. Investors, including Glenview Capital, have been pushing for changes after the company downgraded its earnings outlook for 2024 for the third time this year.

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