CVS is buying Target’s pharmacy business for $US1.9 billion.
The deal means that the discount retailer’s 1,660 pharmacy locations will become CVS-branded units.
CVS’ acquisition could set off a series of similar deals as cost pressures hurt profits at grocery store pharmacies, Reuters reports.
“Target pharmacies helped drive overall sales at the chain but lost money, as the government health care program known as Obamacare expanded ranks of insured and increased pressure on cost,” Reuters writes.
While outsourcing operations to CVS could help the bottom line at companies, it could be bad news for consumers.
The CVS and Target transaction means less competition in the market, writes Ariana Eunjung Cha at The Washington Post. This could lead to higher prices for consumers.
If CVS and Walgreens acquire more pharmacy businesses, this effect could become even greater.
Less competition could also mean higher prices at the “minute clinics” CVS operates.
The Target acquisition combines the number one provider of retail clinics (CVS) with the number five provider (Target), according to Cha.
Washington Post also notes that the big retail clinics could result in conflicts of interest.
“Some analysts worry that medical professionals staffing retail clinics could face pressure to overprescribe in order to boost their employers’ bottom lines,” Cha writes.
More competition generally means lower prices for consumers.
As CVS knocks out the competition, the future prices of medical care are uncertain.
Business Insider Emails & Alerts
Site highlights each day to your inbox.