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. 

“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: 

1. 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.

2. 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.” 

Randy Vogenberg, PhD, principal, Institute for Integrated Healthcare and chair, Employer-Provider Interface Council of Hospital Quality Foundation: 

“Consumers are activated for expecting better service and ask more questions when they want to and are ready. They want home delivery and don’t understand why pharmacy is so different from other retailers. At the same time, consumers are frustrated with health insurance in general and pharmacy is caught in the middle. This is the start of consumerism disruption at retail fostered by healthcare external entities.” 

Emil B. Kraft, principal, OneDigital Pharmacy: 

“CVS is now offering customers convenience in exchange for a participation fee, which encourages loyalty to CVS. This is analogous to Amazon’s successful Prime model. With this move CVS/CarePass members will have another channel to get home- delivered medications and pharmacy benefit managers (PBMs) will find themselves frustrated facing another competitor in the market. However, you’re not likely going to see downward price pressure on costs from CVS’ actions. Amazon’s recent moves, on the other hand, is a different story since they have the scale, ability, and focus to reduce some categories of cost, and could really make an impact. 

“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.” 

Jeremy Schafer, PharmD, MBA, SVP, Precision for Value: 

“Healthcare execs can take this pilot as a sign that retail pharmacy players are aggressively preparing for a potential Amazon entry, and this may result in more options for patients as well as lower costs. Healthcare execs in areas where Amazon may be a competitor should also review their own businesses and conduct market research with customers to understand where the consumer experience falls short. Plugging those gaps may slow Amazon’s entry and progress. Healthcare execs at PBMs and health plans may find retail partners willing to offer additional discounts as a way for retail to best position itself prior to Amazon coming into the market.” 

Ryan Schmid, president and CEO of Vera Whole Health, a direct-to-employer and payer primary care provider in the Western United States: 

“We hope that both Amazon and CVS will use their tremendous influence to move beyond drugs to provide ‘sick care,’ and shape a health ecosystem that rewards both the prevention and treatment of people’s social, mental, and physical health.”