By Sarah S. Voisin and Scott Clement Contributing WriterIn a big deal that’s likely to cause a ripple effect, a $200 million merger between the CVS Health Care Corp. and Walgreen Co. is set to be completed on Monday, according to people familiar with the matter.
The deal, which would be the first of its kind, would be announced Monday by the companies’ joint CEO, Stephen A. Cohen, and CVS CEO David Cohen.
The merger would give CVS a larger and more powerful presence in the health care market, bringing it closer to Walgreen’s lucrative pharmacy business.
The announcement comes after weeks of talks that have been held in secret, with both companies pushing back against the other, with Walgens recent announcement that it is buying rival drugstore chain CVS Caremark.
Cohen and Cohen have both been vocal about their desire to reduce drug prices and the impact that a merger like this would have on their businesses.
In an interview last week with Bloomberg, Cohen said that if the deal went through, CVS would “have the resources and the scale” to make its drugstores more competitive with Walgreen, the industry leader.
“We have been working with them to find a way to make sure we are competitive,” Cohen said.
The combined companies have been seeking a deal since at least the spring of 2015, and the talks have been under intense scrutiny from the Obama administration, the pharmaceutical industry, and lawmakers in both parties.
Walgills public health division has long argued that it would be more cost effective for CVS to buy CVS pharmacies, and some of the largest health plans in the country have already rejected the deal.
In addition, Walgrees public health plans have argued that CVS has been charging higher prices than its competitors, which are generally based in more rural areas and are less likely to offer prescription drugs.
CVS was one of the first companies to launch a drugstore network, with more than 1,300 stores in 34 states and Washington, D.C., in 2015.
Its deal with Walgreens pharmacy division would give the two companies a combined pharmacy business of nearly 800 stores in the United States.
Under the terms of the deal, COS will pay Walgempts $300 million in cash, a one-time payment to fund its acquisition of CVS, and $40 million to help fund the acquisition.
The transaction would also include a number of other financing instruments, including up to $30 million in financing for the COS brand, a total of $100 million to support CVS in the years ahead, and up to a total amount of up to three times the transaction value, according in a filing with the Securities and Exchange Commission.
It will also create a joint venture that will include COS, Walgreen and the health insurance company Aetna.
The companies announced last week that they had struck a deal that would bring the combined companies into a broader alliance, known as the Alliance of American Pharmacists.
Under a new agreement, COP will continue to be the sole drugstore operator for the alliance, with Aeta as the sole pharmacy provider.
The two companies will each control up to 50 percent of the combined pharmacy businesses in each market, with each of them owning 25 percent of any future pharmacy acquisition.
COS plans to continue to operate as a standalone company under the deal and will not be able to compete with WalGreens in the pharmacy business, COCO Chief Financial Officer John Tresco said in a statement.
“In our alliance with Wal-Mart, we can leverage the combined strength of our strengths to create a unified and attractive pharmacy offering in all of our markets, while providing a better value for consumers in all markets,” he said.
COP has long struggled to compete against Walgalls own pharmacy business in rural areas, and many pharmacy customers have complained about the high prices that Walgends own stores charge for prescriptions.
In 2016, COs health plan, Anthem Blue Cross Blue Shield, and Aetas plans, Humana and Blue Cross, launched a program to help pharmacies compete more effectively with Walmart’s stores, which often offer higher prices and less customer service.
The pharmacy alliance, which includes all of the health plans, is designed to ensure that health insurers are not penalized by the drugstore alliance for participating in the alliance.
The alliance’s primary goal is to help lower health care costs, reduce administrative burdens, and streamline the administration of drug pricing for consumers, according the alliance’s website.
The COS and Walgmens combined pharmacy operations could provide CVS with significant savings from a merger, and it could be a boon for the health insurers.
The health plans could also gain from the merger, as it would make them more competitive against other insurers.
Under existing pharmacy rules, they must spend up to 80 percent of their annual sales on drug supplies, and they