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Leading pharmacy chain CVS Corporation (NYSE: CVS) and Merck-Medco Managed Care L.L.C., one of the country's foremost providers of prescription drug care, announced today that CVS will be the exclusive provider of over-the-counter medicine and general health products for Merck-Medco's online business.
The agreement paves the way for Merck-Medco's 51 million health plan members to be able to order products on CVS.com. The Woonsocket, Rhode Island-based CVS re-launched the site in August after it purchased online pharmacy Soma.com for $30 million (US$) last June.
The deal 
also formalizes an arrangement that makes CVS the only online pharmacy to accept prescription orders from Merck-Medco customers over the Internet. The orders are to be delivered by Merck-Medco's mail service pharmacies or will be available for pickup at CVS stores. CVS' specialty pharmacy company, ProCare, will also become the exclusive provider of specialty pharmacy mail-order services for Merck-Medco plan members.
A CVS spokesman told the E-Commerce Times that the financial details of the alliance were not being disclosed. The companies did say that it includes a "pay for performance" retail pharmacy arrangement.
"For CVS, this agreement is a major step forward for our e-commerce efforts and provides exclusive OTC access to all of Merck-Medco's more than 51 million members nationwide, many of whom are west of the Mississippi, a region where CVS currently does not have retail stores," said CVS CEO Tom Ryan. "For both parties, this is a broad and strategic alliance that enhances our national reach."
Bringing Together Two Powerhouses
With 4,100 stores across the eastern half of the U.S. and second quarter sales of over $4.3 billion, CVS seemingly knows the brick-and-mortar pharmacy business.
This year, CVS is getting a full tutorial in the online business. Todd Andrews, the company's director of corporate communications, told the E-Commerce Times that it plans to update its Web site to improve upon what he claims is the only real full-service Internet pharmacy.
Merck-Medco makes equally laudatory claims about its Internet business, calling Merck-Medco.com -- which was launched in October of last year -- the world's largest Internet pharmacy. It dispenses an average of 30,000 prescriptions through its Web site every week.
Merck-Medco's members will increase to 65 million by next June, when it begins serving United Healthcare Group and other new clients. In 1998, Merck-Medco managed 322 million prescriptions with a total worth of some $14 billion.
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