Drugstore giant CVS Health’s launch of CarePass, an experimental paid membership program that offers delivery perks, discounts, and $10 monthly store credit, is set to rival Amazon.
Amazon recently bought online pharmacy PillPack for a reported $1 billion.
The CVS Health program, CarePass, will charge $5 monthly or $48 for a year and will be piloted in the Boston market. According to the CVS website, CarePass members get free one- to two-day delivery for eligible purchases on CVS.com and qualifying prescription drug orders through USPS, a 20% discount on eligible CVS Health brand products in store and online, and access to a 24/7 pharmacist helpline.
Experts share their takes on what CVS Health’s CarePass means to the industry.
John Sarich, vice president of strategy at VUE Software, a firm that specializes in automating business processes for the insurance industry:
“As CVS Health’s acquisition of Aetna comes to a close, there’s more than meets the eye with this membership pilot move. A fast-growing segment of healthcare delivery that’s gaining physician adherents, is concierge care. Indeed, it’s the fastest growing area for primary care physicians. Under a concierge plan a person pays a monthly fee of $50 to $60 per month and that fee covers the physician costs for an individual for all of the minor scrapes, pains, and illnesses that might befall a person. If a more-costly procedure is required then the cost of that procedure is priced to be affordable—typically, an X-ray is $25 and an MRI is $250.
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“Generally, the concierge plan is designed to meet the low-level medical issues, and the patient buys a high-deductible health plan to meet the higher costs of more costly procedures.
“Paired with a health savings account and perhaps a critical care policy, the annual cost could be a less than $250 a month. Also, the concierge plans generally do not have issues with pre-existing conditions. Now comes CVS into the fray with low-cost prescription drugs and the advice of a pharmacist. With that, the high-cost plans most people have should start to experience the effects of competition:
- CVS is opening up the healthcare delivery business to competition, which ought to result in lower costs. Also noteworthy is that CVS’ delivery program highlights the USPS as the delivery resource—direct delivery via USPS is a shot across the bow of Amazon.
- CVS is setting the price bar at a level that may make it tough for Amazon. At $48 a year for CarePass. Aetna, which is CVS owned, is going direct with low-cost medical. So, that begs the question, what are Walmart and others going to do to respond to CVS?”
Dane Pearson, a consultant in the healthcare practice of AArete, a global management consultancy focused on data-informed performance improvement:
“CVS’s foray into the subscription-based medication delivery market may appear to directly challenge Amazon Prime and Pillpack. However, here, we actually have two organizations working toward the same goal: a meaningful reduction in pharmacy costs by steering consumers from 30-day drug prescriptions obtained from brick and mortar stores to 90-day prescriptions delivered through the mail.
“While both organizations are working to increase their slice of the pie, if there were no change in market share, both would still end up winners due to the economics of mail-delivery pharmaceuticals. And one of the main factors behind gaining market share, whether its Amazon and PillPack or CVS and CarePass, will be who better uses digital and technology levers.”