Strangling Competition, Swallowing Rivals: The CVS Model of Healthcare

In the United States of America, capitalist monopolies have been mostly unregulated, especially in contemporary times. While the merits of this capitalist system can be debated, when this comes at the cost of lives, as in the case of healthcare retailers. Over the past few years, CVS has imposed drastic "clawback fees" of over $500 million dollars, in a predatory campaign aimed at debilitating their competitor, Rite Aid, in the Pacific Northwest before then acquiring the struggling company. Throughout the years, CVS has had a policy of devastating the financials of their competitors, only to later consolidate market control over their company, leading to price hikes for consumers. Vertical integration, in this sense, is used to prey upon independent and smaller growing pharmacies to institutionalize their dominance and cement profit.

Beyond this instance, CVS has had a legacy of systemic abuses. An Federal Trade Commission report in 2024 highlighted that CVS, alongside Express Scripts and OptumRx, fueled price inflation for speciality drugs(often by hundreds to thousands of percent) by using preferential treatment of affiliated pharmacies and rebate-driven formularies(which reduce the upfront cost of medications, but often come with manipulative strings attached.) A later FTC investigation found that from 2017 to 2022, these Pharmacy Benefit Managers(third-parties that manage prescription drug benefits for health insurance companies) amassed billions in profit by exploiting their monopoly over supply chains.

These practices are not isolated. In September of 2024, the FTC filed a separate administrative complaint, showing evidence that CVS and its peelers rigged the insulin market by favoring high-rebate, expensive productions, excluding affordable options, and thus shifting high monetary costs onto diabetics that are vulnerable and in need of the life-saving drug. In January of this year, another report confirmed the pattern: Pharmacy Benefit Managers(PBMs) like CVS impose dramatic mark-ups across life-saving therapies: from cancer drugs to heart disease, while squeezing out independent pharmacies that challenge their philosophy and dramatically inflating consumer costs.

Luckily, some regulation is being successful in challenging CVS's practices. Early this year, a federal court required the company to fully comply with the FTC's investigative interest into their business practices. Meanwhile, a federal court just last week ordered CVS to pay almost $300 million in damages for Medicare fraud(stemming from their overcharges on consumers.) The award, which was originally $95 million, was tripled due to the court's findings of reckless disregard. But while this is certainly a step in the right direction, it doesn't address the fundamental problems with PBMs being able to artificially inflate prices at the cost of lives.

In other positive news, while the pharmaceutical lobby does still have a chokehold on most politicians, some resistance is growing. In Arkansas, Governor Sanders led an initiative to ban PBMs such as UnitedHealth, CVS, and Cigna from owning pharmacies, a step in the right direction of ending the vertical integration that allows these companies to negotiating with themselves, prioritize profits over life-saving access, and blocking out any "fairer" competition. Despite a preliminary injunction blocking the implementation of the law, this could set the precedent for similar reforms across the nation. In fact, in Louisiana, Attorney General Merrill filed three lawsuits against CVS for mass-text obeying, unfair competition, and abusive under-imbursement of independent pharmacies in a suit that alleges that CVS leveraged their relationship with their patients to lobby against proposed legislative PBM reforms, violations trust and privacy laws.

In understanding why CVS, or any PBM with significant influence behaves this way, a basic understanding that most businesses in a capitalist system rely on vertical integration is required. CVS has an empire controlling retail pharmacies, insurances (Aetna), and its PBM via Catermark, a structure that allows both conflicts of interest and unchecked power to award interest, set unfair prices, and direct patients to its own outlets. CVS, as the world's second-largest health ace company has gotten to its position through Medicare fraud, deceptive pricing, and contributing to the opioid crisis, reflecting a systemic privatization of profit over care.

Victories against PBMs like the aforementioned settlements for deceptive practices are telling, but such settlements only bar specific switches that harm patients; but the suits don't directly address the structural incentive of profit against consumer interests. CVS Health epitomizes the corruption of healthcare of capitalism: pursuit of profit, vertical integration, and corruption have caused a system that punishes the vulnerable and corrodes our public health.

What does this mosaic of malfeasance reveal? From left-of-center vantage points, CVS Health epitomizes the corruption of healthcare by capitalism's consolidation: vertical integration, opacity, and entitlement have yielded a system that punishes the vulnerable, undermines local pharmacies, and corrodes public health.