CVS is breaking itself up, but somehow Caremark gets to stay in the family?

CVS just announced it’s splitting into two publicly traded companies. One gets the roughly 9,000 retail pharmacies, MinuteClinics and mail-order pharmacy business. The other keeps Aetna, Caremark, specialty drugs and the healthcare services businesses.

Wait a minute. Isn’t Caremark the part that really needs to be separated?

A pharmacy chain owning its own PBM is a pretty obvious conflict of interest. The PBM manages prescription benefits, negotiates with drugmakers, decides which pharmacies are in its network and determines how those pharmacies get reimbursed. Meanwhile, CVS owns thousands of pharmacies competing for that same business.

So who exactly is Caremark working for when it makes those decisions? The employer paying for the benefits? The patient filling the prescription? Or the CVS pharmacy down the street?

That’s the problem with this whole vertically integrated healthcare model. The same company can be the insurer, the middleman managing drug benefits, and the pharmacy filling the prescription. Then everyone is supposed to believe all those businesses are working independently in the customer’s best interest.

And this isn’t some imaginary regulatory concern. The FTC has been going after the big PBMs, including Caremark, over drug pricing and pharmacy practices. CVS reached a settlement with the FTC in July, but that doesn’t make the underlying conflict disappear.

CVS is planning to complete this breakup in the first half of 2028. Shareholders will own shares in both companies when it happens. But why leave Caremark attached to Aetna and keep the PBM inside the same healthcare empire?

Honestly, the cleaner solution is to separate the PBM too. Let Caremark operate independently. Let pharmacies compete on their own. No pharmacy chain should be its own benefits manager.

CVS spent years selling investors on the idea that putting all these businesses under one roof created synergies. Now it’s taking the roof apart, but leaving the middleman in the house.

Not financial advice.