CVS Health said on Wednesday that it will split its retail pharmacy business from its pharmacy benefit manager (PBM) and health insurance operations in a restructuring announced months after the retail pharmacy giant sued Tennessee over the FAIR Rx Act, which prohibits vertical integration between pharmacies and PBMs.
CVS Health said it will be split into two companies, with the first set to become a “leading healthcare solutions company,” that will include Aetna, CVS Caremark, CVS Speciaty, Oak Street Health, and Oak Street Health. This company will continue to be known as CVS Health, according to its corporate press release.
The press release stated that the second company will be named CVS Pharmacy, and will include the roughly 9,000 CVS pharmacies, as well as the company’s mail pharmacy, virtual care MinuteClinic, and Health100 technology services business.
In a statement, CVS Health CEO David Joyner said the decision carried on the company’s tradition of “proactively evolving” in the fields of “affordability, greater access, and a simpler experience.”
“Over the last two years, we have made meaningful progress: we built a world-class leadership team, strengthened our financials, revitalized operations across the enterprise, and drove total shareholder return,” said Joyner. “From a position of strength, and a focus on the long term, we plan to create two focused companies to improve consumer engagement, affordability, and care coordination.”
The company’s press release did not reference its May lawsuit over the FAIR Rx Act, but its lawyers specifically raised the possibility of splitting the company in its original filing.
“Absent injunctive relief, CVS must take drastic steps to comply with the Act,” they argued in the lawsuit. “There is no feasible corporate structure – absent CVS’s complete corporate separation from Caremark or Aetna – that can preserve CVS’s ability to hold a pharmacy license in Tennessee while continuing to provide PBM and health insurance services to patients and plan sponsors in 49 other States.”
Despite the split, the company’s decision to maintain its specialty pharmacy business alongside Caremark and Aetna could mean the litigation will continue, as the FAIR Rx Act only contains exceptions for specialty drugs, while including specialty pharmacies in its prohibition on vertical integration.
The lawsuit came shortly after Governor Bill Lee signed the legislation into law in May. It was championed by State Senator Bobby Harshbarger (R-Kingsport), who like his mother, U.S. Representative Diana Harshbarger (R-TN-01)), is a licensed pharmacist.
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Tom Pappert is a 2025 recipient of the Dao Prize and the lead reporter for The Tennessee Star. He also reports for the Star News Network. Follow Tom on X. Email tips to [email protected].
Photo “CVS Pharmacy” by CVS.
