CVS Health, a drugstore giant, recently announced the launch of pilot membership program, CarePass, that would provide delivery in some instances, discounts and $10 allotment to spend in stores.
Elements of the plan resemble existing memberships, such as Amazon Prime’s reputation in the space following their purchase of PillPack earlier this year.
When announced, CVS Health’s pilot program created a buzz, prompting Managed Healthcare Executive to interview several experts in the industry to understand the impact of this service. Emil Kraft, Principal of OneDigital Pharmacy, explores how the move will impact existing CVS customers, adding another channel for home-delivered medications ultimately increasing loyalty. Although the added competition will most likely frustrate Pharmacy Benefit Managers (PBMs), he does not see it leading to downward price pressure, as detailed in the article, “Drugstore Chain Membership Program Poised to Rival Amazon: Experts React” by Managed Healthcare Executive.
Historically, the only home delivery method available to customers has been the mail-order pharmacies owned by the PBMs. But, despite PBMs’ claims of savings, we see about two out of three administrative services only (ASO) groups that we analyze losing money from PBM mail-order utilization (i.e., most groups would save money by filling all mail-order prescriptions at average retail prices). So PBM mail-order pharmacies deliver huge profits and PBMs unsurprisingly push mail-order penetration relentlessly. Amazon and CVS venturing into home delivery threatens the PBMs’ monopoly over home delivery convenience.
— Emil Kraft, Principal of OneDigital | Pharmacy, Seattle
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