The Justice Department’s approval of the $69 billion merger between CVS Health and Aetna on Wednesday caps a wave of consolidation among giant health care players that could leave American consumers with less control over their medical care and prescription drugs.
The approval marks the close of an era, during which powerful pharmacy benefit managers brokered drug prices among pharmaceutical companies, insurers and employers.
But a combined CVS-Aetna may be even more formidable. As the last major free-standing pharmacy manager, CVS Health had revenues of about $185 billion last year, and provided prescription plans to roughly 94 million customers. Aetna, one of the nation’s largest insurers with about $60 billion in revenue last year, covers 22 million people in its health plans.
The two companies say that they will be better able to coordinate care for consumers as the mergers help tighten cost controls. Larry J. Merlo, the chief executive of CVS Health, said in a statement that the approval “is an important step toward bringing together the strengths and capabilities of our two companies to improve the consumer health care experience.”
But critics worry that consumers could end up with far fewer options and higher expenses.
Just last month, the Justice Department also approved the takeover of Express Scripts, a major CVS rival, by the big insurer Cigna.
“This type of consolidation in a market already dominated by a few, powerful players presents the very real possibility of reduced competition that harms consumer choice and quality,” George Slover, senior policy counsel for Consumers Union, an advocacy group, said in a statement.
The consumer organization had opposed the Aetna-CVS merger, arguing that people enrolled in Aetna health plans could be forced to seek care at CVS retail clinics, and that those who were not insured by Aetna could pay higher prices for drugs than those who were.
“The combination of CVS and Aetna creates an enormous market force that we haven’t seen before,” Mr. Slover said.
The Justice Department had undertaken an antitrust review of these types of deals, approving many because they involve distinct businesses. It granted conditional approval to the CVS-Aetna deal as long as Aetna sold off its private Medicare drug plans.
Amid the growing outcry over the high price of medicines, pharmacy managers have been vilified alongside big drug makers. Critics say pharmacy managers’ secretive deals — under which price-setting strategies are not publicly disclosed — enrich companies on all sides of the prescription drug pipeline while failing to benefit consumers.
In addition to the two major entities now attached to powerful health insurance companies, OptumRx, another major pharmacy manager, is owned by UnitedHealth Group. Anthem, which operates for-profit Blue Cross plans in several states, is developing its own in-house pharmacy operation.
“There are going to be mammoth organizations,” said Adam J. Fein, the chief executive of Drug Channels Institute, a research firm.
Now that generic drugs account for about 90 percent of all prescriptions, the role of pharmacy benefit managers, known as P.B.M.’s, has changed over time, with higher drug prices largely a product of the increase in expensive specialty medicines for conditions like rheumatoid arthritis or cancer.
“The job of the P.B.M. is being transformed,” Mr. Fein said.
Facing the prospect of competition from outsiders like Amazon, whose tentative forays into the pharmacy business have already shaken up the industry, established players have also been looking for ways to stay relevant to their customers and enlarge their share of the health care market.
The companies “are feeling pressure to do something different or it will be done to them,” said Brian Marcotte, the chief executive of the National Business Group on Health, which represents large employers.
“It’s a disruptive period of time when the players are rearranging themselves,” said David W. Johnson, the chief executive of 4sight Health, a consultant.
Five state attorneys general — from California, Florida, Hawaii, Mississippi, and Washington — joined with the Justice Department in conditionally approving the Aetna-CVS deal. The merger is expected to be finalized sometime before the end of the year.
The preliminary approval was based on Aetna’s decision to sell its plans to WellCare Health Plans to address the government’s concerns that the combined companies would control too much of the market. But state regulators and consumer groups have also raised other concerns about the impact of the merger, saying that the lack of large pharmacy managers that aren’t affiliated with insurers could make it difficult for smaller competitors in either sector.
Previous mergers in the industry have left consumers with fewer choices and higher drug bills, said David A. Balto, an antitrust lawyer who is a critic of the pharmacy managers.
“This is a marketplace that hasn’t done well because of lack of transparency, and transparency may be even weaker,” said Mr. Balto, who had worked at the Federal Trade Commission and the Justice Department. Affiliations with large insurers could change that dynamic, he added. “It might correct some of the more pernicious practices.”
Mr. Balto warned that while state officials have not traditionally overseen pharmacy managers, the combined mammoths “could bring them into the cross hairs of regulation.”
The mergers also show how far organizations are crossing the traditional line between insurance companies responsible for paying for care and providers responsible for delivering it.
There have always been organizations that perform both functions, but the lines have are increasingly blurred. UnitedHealth, for example, has been aggressively buying physician practices and surgery centers, while Humana announced plans to become the nation’s largest provider of hospice care.
“The nature of the last six to 12 months is much more vertical and the size of the deals are significantly larger,” said Gurpreet Singh, a partner specializing in health care services at the consulting and advisory firm PwC.
Much of the enthusiasm over CVS’s acquisition of Aetna has focused on the insurer’s addition of a retail component and the potential use of CVS’s 10,000 pharmacies and 1,100 retail clinics to deliver care, particularly to Aetna customers.
Imagine a single hub where someone can go to get care for everything from a sore throat to their diabetes. CVS stores could become places to get blood tests for monitoring chronic conditions, not just toothpaste or prescription refills. “You could see the store as a base of operations for a lot of these delivery channels,” said George Hill, a senior analyst at RBC Capital Markets.
Mr. Merlo will be the chief executive of the combined companies, and Mark T. Bertolini, Aetna’s chief executive, will step down and join the CVS board. CVS has committed to keeping Aetna at its headquarters in Hartford for the next decade.
“In our new health care model, we provide people access to more affordable care when, where and how they need it,” Mr. Merlo said. “Care will be coordinated among the health care providers, caregivers and their health care teams, leveraging the connectivity CVS will provide.”
Mr. Hill said CVS was also well situated for any incursion by newcomers like Amazon. In addition to the regulatory hurdles such entrants would have to scale to sell prescription drugs, people typically buy medicine from drugstore or mail-order companies dictated by their health plan.
“You’re going to go where your payer has told you to go,” Mr. Hill said.
It may be years before it is clear whether Aetna and CVS can succeed in changing how their businesses operate.
“There’s a lot of opportunity,” Mr. Marcotte said, but warned that the size of the combined companies makes it even more challenging. “These big mergers take a while to integrate,” he said.