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We"re bringing health care to"where people live and work."So declared Larry Merlo,CEO of CVS Health,an American retail-pharmacy giant,announcing a$69 billion deal to buy Aetna,a heatth insurer.One rationale for the deal-assuming the regulators wave it through-is for the merged firm to develop personalised health care that people can easily get access to.There is another,more defensive,impetus behind the deal-the prospect of Amazon going into prescription medicine.The American pharmaceutical market is an alluring one for the online giant.It is large,worth$450 billion in 2016.And it is widely regarded as inefficient,leaving customers without good information about products they are buying.Compared with books,toys and other bulky items,the drugs market would appear to be a nirvana for Amazon.Prescription medicines weigh almost nothing,take up little space and can cost hundreds or thousands of dollars per pill.But three barriers block the road to this idyll.First,the sale and distribution of drugs is heavily regulated.Amazon would not be able to dump prescription drugs into the same fulfilment channels as its other products.It must acquire pharmaceutical licences for any state where it wishes to operate.Amazon would also need approval from the Food and Drug Administration at a federal level.Operating in a controlled industry would be a departure for a free-wheeling tech firm.Second,most drugs are paid for by insurers,not by consumers.The pharmacy-benefits managers(PBMs),a sort of middlemen that buy drugs for insurers and companies,perform the complex task of matching purchases with patients"insurers,so that drugs are paid for.That is a source of the sort of opacity that Amazon would seek to remove.But the rcommerce firm would still need to handle issues of payment in the background,without keeping asking consumers for insurance details.Third,although drugs do come in small packages,their shipping and handling often require special attention.Many drugs must be kept cold throughout the supply chain.Others are dangerous,and must be kept in locked cages.Yet these drugs are often also the most expensive.If Amazon cherry-picks drugs that fit well into its existing network,it will miss out on a large slice of the market.Customers could find it confusing to be able to get some prescriptions through Amazon"s store but not others.Amazon could find itself a partner,however.In July the boss of Express Scripts,a PBM,said it could use Amazon as an"efficient provider in networks".Or Amazon could buy what it needs.It might buy Rite Aid,a big pharmacy chain,giving it licences,a"cold-chain"infrastructure and Rite Aid"s small PBM in one swoop.A prospect like that goes a long way to explaining the marriage of CVS and Aetna. The word"nirvana"(Line 7,Para.2)is closest in meaning to
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We"re bringing health care to"where people live and work."So declared Larry Merlo,CEO of CVS Health,an American retail-pharmacy giant,announcing a$69 billion deal to buy Aetna,a heatth insurer.One rationale for the deal-assuming the regulators wave it through-is for the merged firm to develop personalised health care that people can easily get access to.There is another,more defensive,impetus behind the deal-the prospect of Amazon going into prescription medicine.The American pharmaceutical market is an alluring one for the online giant.It is large,worth$450 billion in 2016.And it is widely regarded as inefficient,leaving customers without good information about products they are buying.Compared with books,toys and other bulky items,the drugs market would appear to be a nirvana for Amazon.Prescription medicines weigh almost nothing,take up little space and can cost hundreds or thousands of dollars per pill.But three barriers block the road to this idyll.First,the sale and distribution of drugs is heavily regulated.Amazon would not be able to dump prescription drugs into the same fulfilment channels as its other products.It must acquire pharmaceutical licences for any state where it wishes to operate.Amazon would also need approval from the Food and Drug Administration at a federal level.Operating in a controlled industry would be a departure for a free-wheeling tech firm.Second,most drugs are paid for by insurers,not by consumers.The pharmacy-benefits managers(PBMs),a sort of middlemen that buy drugs for insurers and companies,perform the complex task of matching purchases with patients"insurers,so that drugs are paid for.That is a source of the sort of opacity that Amazon would seek to remove.But the rcommerce firm would still need to handle issues of payment in the background,without keeping asking consumers for insurance details.Third,although drugs do come in small packages,their shipping and handling often require special attention.Many drugs must be kept cold throughout the supply chain.Others are dangerous,and must be kept in locked cages.Yet these drugs are often also the most expensive.If Amazon cherry-picks drugs that fit well into its existing network,it will miss out on a large slice of the market.Customers could find it confusing to be able to get some prescriptions through Amazon"s store but not others.Amazon could find itself a partner,however.In July the boss of Express Scripts,a PBM,said it could use Amazon as an"efficient provider in networks".Or Amazon could buy what it needs.It might buy Rite Aid,a big pharmacy chain,giving it licences,a"cold-chain"infrastructure and Rite Aid"s small PBM in one swoop.A prospect like that goes a long way to explaining the marriage of CVS and Aetna. The word"nirvana"(Line 7,Para.2)is closest in meaning to
Aa large market.
Ban enjoyable place.
Can inefficient sector.
Da difficult challenge.
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