Same-day prescription drug delivery service is planned
CVS Health said on Monday it will offer same-day prescription drug delivery in some cities and next-day delivery nationwide next year, in a move suggesting that it is paying close attention to reports that Amazon is eyeing the wholesale prescription drug market.
CVS’s more than 9,700 pharmacy locations nationwide will fulfill prescription drug orders for the next-day delivery in early 2018 while select metro markets from Boston to San Francisco will provide same-day delivery, CVS said. In New York’s Manhattan, CVS will offer same-day delivery of prescription drugs and a selection of over-the-counter products across the city for free starting in December.
CVS manages or dispenses 2.4 billion adjusted prescriptions annually, according to its 2016 annual report.
CVS this year began offering Instacart personal shopping and delivery service, which the drugstore chain expects to expand to reach 50% of US households by the end of this year. CVS also has rolled out curbside pickup service that allows customers to shop online via its app for pickup in the store in an hour.
CVS said it doesn’t have more details regarding how much the new same-day and next-day prescription drug delivery offers will cost consumers, except to say it’s been testing a variety of options, including free-delivery with a purchase of some non-prescription items.
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“What we spend a lot of time talking about is serving the customer wherever, whenever and however she wants,” said Helena Foulkes, Executive Vice President, CVS Health and President, CVS Pharmacy, on a conference call Monday, when the company also reported Q3 results. “Getting a prescription in 15 minutes or less (in person) is super convenient, but we wanted to add on to that….We’ve been able to use our scale to negotiate a low-cost competitive option that we think consumers will be willing to pay for, both in same-day and next-day delivery.”
Whether it will indeed be low cost enough remains to be seen. CVS currently offers limited overnight drug delivery options, and its prices currently are well behind leaders in the delivery space such as Walmart.
A CVS spokeswoman declined to say what will happen to its existing delivery options. Foulkes, however, gave a rough idea on how big the program is. On the call, she said 1,600 of CVS stores have been doing home delivery “for a long time,” adding it’s “still fairly small even in those stores.”
In another sign that Amazon threat is being taken seriously, absent from other quarterly earnings slide shows this year, Monday’s slideshow included a four-page section titled “The CVS Health Value Proposition.” In it CVS touted what set it apart, including one in 5 prescriptions that have some sort of pharmacist involvement; nearly 70% of US population who live within three miles of one of its stores; and its pharmacy app that has 21 million downloads and 50 million people who signed up for its text message program that enables them to refill their prescriptions easily through their mobile devices.
That pitch wasn’t lost on other observers either.
“Your comments around CVS Health value proposition sounds like it’s really geared towards all of the talk around Amazon and why CVS is well positioned even in the face of potentially Amazon coming into this market,” JP Morgan analyst Lisa Gill asked CEO Larry Merlo on the call.
Without mentioning Amazon, Merlo answered that question this way. “We are always listening to our customers,” he said. “Being good listeners helps us understand where they have friction points that we need to work to eliminate.”
Could that include the possibility of a partnership down the road with Amazon? In response to a separate question on whether CVS, which also is a PBM (pharmacy benefit manager), could work with Amazon if it should enter the drug supply business, Merlo said CVS is leaving the doors open.
“If somebody’s able to do something that perhaps doesn’t exist in the marketplace, we’re certainly open to understanding and working with them in that regard,” he said.
Yet another chapter in the disruption story of Amazon.
by Andria Cheng
