CVS Health’s “Captive Strategy” in Congressional Hearing
During a recent hearing in the Health Subcommittee of the Committee on Energy and Commerce, Representative Alexandria Ocasio-Cortez (NY-14) confronted CVS Health Group President and CEO David Joyner about the company’s controversial “captive strategy”—a business model that controls patients’ entire healthcare journey while maximizing corporate profits.
Using CVS’s own investor call example, Rep. Ocasio-Cortez illustrated how a patient named “Kate” gets trapped in the CVS ecosystem: Kate has Aetna health insurance (owned by CVS), visits an Oak Street Health clinic (owned by CVS), receives a prescription from a CVS-affiliated doctor, and fills it at CVS Pharmacy—with prices dictated by CVS Caremark (the pharmacy benefit manager also owned by CVS) and medications potentially manufactured by Cordavis (CVS’s drug manufacturer).
“The health insurance gets a cut, the pharmacy benefit manager gets a cut, the drug manufacturer gets a cut, and the patient gets screwed,” Rep. Ocasio-Cortez stated bluntly.
Market Power and Monopoly Concerns
CVS Caremark processes nearly 30% of all U.S. prescriptions, giving the company enormous influence over medication pricing for roughly one-third of Americans. The Federal Trade Commission has found that healthcare conglomerates like CVS charge significantly more for medications filled at their pharmacies, with thousand-percent markups on drugs for cancer and HIV.
In 2023, former CVS CEO Karen Lynch admitted this captive strategy would “show up on [their] financial results,” while acknowledging that “consumer health is worsening.“
When Joyner defended the model as working “really well for the consumer,” Rep. Ocasio-Cortez countered: “I think it works very well for CVS.”
Breaking Up Healthcare Monopolies
Drawing a comparison to the Glass-Steagall Act that addressed banking monopolies 100 years ago, Rep. Ocasio-Cortez suggested breaking up healthcare conglomerates might be necessary to protect patient access and reduce costs.
“Whether you’re a blue-blooded capitalist or a card-carrying democratic socialist, I think corporate monopolies are a problem,” she stated, noting potential bipartisan agreement on the issue. “This vertical integration is destroying people’s ability to access care.”
The congresswoman argued that when insurers own pharmacies, PBMs, drug manufacturers, and healthcare facilities, they control both sides of every transaction—allowing them to inflate costs while maintaining the appearance of spending heavily on care.
“If we believe in competition, I think we should put our votes and our legislation in alignment with that, and consider breaking up this industry in order to allow the competition that prevents this kind of vertical integration and abuse of power,” Rep. Ocasio-Cortez concluded.
CVS Health’s Vertical Integration:
- Aetna: Health insurance
- CVS Caremark: Pharmacy benefit manager (processes 30% of U.S. prescriptions)
- Oak Street Health: Medical clinics
- CVS Pharmacy: Retail pharmacies
- Cordavis: Drug manufacturer
