CVS Health’s breakup stops short of resolving the PBM conflict debate
CVS Health plans to split into two companies in the first half of 2028, a move that marks a sharp reversal for one of the best-known models of healthcare consolidation. The separation will carve the company into a healthcare solutions business housing Aetna, CVS Caremark, CVS Specialty, Oak Street Health and Signify Health, and a national retail pharmacy and community healthcare company built around about 9,000 pharmacies, mail pharmacy, MinuteClinic and the Health100 technology services business.
The announcement makes plain that the old argument for vertical integration is losing ground. It does not, by itself, settle the more difficult question of whether the underlying conflicts of interest in pharmacy benefit management have actually been removed.
The insurer-PBM core stays together
The most consequential detail is what remains inside the healthcare solutions company. Aetna and Caremark will still sit under the same corporate roof, and that pairing has long drawn scrutiny because the insurer and the PBM can influence drug access, formulary design, utilization management and reimbursement flows in ways that are difficult for outsiders to untangle. Keeping specialty pharmacy in the same unit deepens that concern, because specialty drugs are among the most expensive products in the market and often carry the most discretion in channel selection, rebate capture and margin allocation.
In practical terms, the split separates retail dispensing from the insurance-PBM core. It does not create a clean line between drug coverage decisions and the business that profits from drug spend.
That is why critics view the move as a partial rearrangement rather than a full divestiture.
Mark Cuban, co-founder of Cost Plus Drugs, framed the transaction as financial engineering that may reward shareholders without lowering costs for patients. AJ Loiacono, founder and chief executive of Judi Health, was even more direct: retaining specialty pharmacy with the PBM and insurance businesses means CVS still controls dispensing assets and still profits from drug spend.
Specialty pharmacy remains the strategic pressure point
The decision to keep CVS Specialty inside the healthcare solutions company matters because specialty pharmacy has become one of the most valuable levers in a market where spread pricing is under pressure. As regulators and employers demand more transparency, large PBMs have every reason to look for revenue elsewhere. Specialty dispensing offers one of those routes, especially when the same enterprise can shape which drugs are covered, how they are routed and where the prescription is filled.
That commercial logic explains why some observers see the split as a way to shed lower-margin retail and mail-order operations while preserving the most lucrative parts of the integrated model. The retail pharmacy and MinuteClinic assets move into a separate company, but the business most likely to benefit from clinical control over high-cost therapies stays attached to the insurer-PBM combination.
Aabed Meer, founding member and partner at Aphias Capital, pointed to another telling feature of the plan: CVS is separating care delivery assets in a way that still preserves integration where it appears most strategically useful. Oak Street Health and Signify Health will stay with the insurer side, while MinuteClinic moves with the pharmacy business. The structure suggests that CVS sees ongoing value in aligning longitudinal care for seniors with insurance, while leaving walk-in and convenient care closer to the retail channel.
Federal scrutiny has already shifted the ground under PBMs
The timing of the announcement is no accident. Federal and state scrutiny of PBMs has intensified, and lawmakers have increasingly targeted vertical integration between PBMs, insurers and pharmacies. Some states are moving to bar PBMs from owning pharmacies, while federal proposals such as the Break Up Big Medicine Act have pressed the same theme at a national level.
David Joyner said the bill influenced the split, and he also framed the reorganization as an attempt to help each company focus, allocate capital more precisely, move with greater agility and operate with more simplicity. Those are standard corporate arguments for separation, but they also reflect a regulatory reality: the existing model has become harder to defend.
The Department of Labor’s new rule, finalized last week, adds another layer of pressure by requiring PBMs and their affiliates to disclose fees and compensation to self-insured employers. For a business model built on layered ownership, affiliate relationships and opaque contracting, more disclosure can expose exactly where value is created and where it is extracted.
Transparency rules may prove harder to navigate inside a shared structure
Loiacono argued that if both post-split entities retain the CVS name, true independence will be difficult to establish in practice. He also suggested that the new fee disclosure requirements could become harder to manage if the companies remain operationally intertwined. The concern is not semantic. It centers on whether the public can meaningfully separate administration from dispensing when the same corporate brand still connects the two sides of the business.
That concern is amplified by the fact that the insurer and PBM remain together. If fee disclosure is meant to reveal the economics of PBM contracting, a separation that leaves the core decision-making structure intact may do little to eliminate the incentives that drew federal attention in the first place.
What the split says about the future of healthcare conglomerates
The planned breakup also signals a broader shift in how large healthcare companies may be forced to present themselves to investors and regulators. Michael Abrams, co-founder and managing partner of Numerof & Associates, said the new pharmacy company can now maximize its own profitability, while the simpler structure may make it easier for investors to evaluate each business on its own merits. He also suggested the move could mark a retreat from the vertically integrated healthcare model that has defined much of the last decade of consolidation.
Yet the transaction leaves one key question hanging over the market: whether other conglomerates will feel pressure to follow. UnitedHealth Group and Cigna sit within the same conversation because both operate in complex structures where insurance, benefits and care delivery can intersect in ways that attract scrutiny.
Samir Batra, managing partner at Health Innovation Pitch, captured the reaction in blunt terms. The split may have looked like a decisive break at first glance, but the insurer-PBM core stayed together. In that sense, the company is changing shape without surrendering the strategic arrangement that has drawn the most criticism.
Vertical integration may be dying, but the incentives that built it are still very much alive.