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Has CVS found an answer to blunt Amazon’s move into the pharmacy business?

Written by George Anderson

Source: CVS Pharmacy

CVS is testing a subscription program that allows members to get free deliveries on prescription medicines and front-end merchandise for $48 a year or $5 a month.

The subscription program, called CarePass, currently being tested in Boston, is clearly intended to help CVS get ahead of rivals, specifically Amazon.com. The e-tailing giant has moved into the prescription drug business with its acquisition of the online pharmacy, PillPack. Amazon has also been undercutting CVS on the price of private label over-the-counter remedies.  CVS’s prices on like items were 20 percent higher than Amazon’s, according to a Jefferies Group report published in June.

With their CarePass subscriptions, CVS customers are able to bundle home delivery of prescription drugs and non-prescription products, which Amazon is not currently able to offer.

The service, which is significantly less expensive than the $119 annual fee and $12.99 monthly fee charged by Amazon, offers a 20 percent discount of all CVS private labels. It also includes a 24/7 pharmacist helpline. Subscribers receive a $10 monthly reward that they can use in the chain’s stores or on its website.

In an interview with CNBC, CVS Pharmacy president Kevin Hourican called CarePass “one-of-a-kind in the marketplace” and said interest among customers has been high. He said the program, which is currently being tested in 350 stores, will eventually be rolled out nationwide after CVS determines tweaks needed based on input from subscribers. Future additions to the CarePass program may include MinuteClinic services.

In August, CVS reported that its same-store prescription sales increased 9.5 percent in the second quarter while its front-end comps fell one percent.

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