When you are picking up prescription at the pharmacy, you want your medicine quickly and easily. In 2016, there were over 4 billion prescriptions filled at retail pharmacies in the United States. While standing in line to fill a prescription, you might be looking at your iPhone wondering how technology is going to change the process.
CVS Health is focused on how technology could change how customers order and receive their drugs. In 2016, CVS had 9,700 retail pharmacies across the country and 23% total US retail pharmacy business. This business is threatened by competitors who are using technology to upend part of the pharmaceutical supply chain.
There is speculation that Amazon may be about to leverage their customer base and digital expertise to enter the pharmacy business. A recent Goldman Sachs report posited that Amazon would launch an online pharmacy. Only 20% of CVS prescriptions involve a clinical interaction that requires interacting with a pharmacist, leaving significant room for a digital-first competitor. Amazon has already acquired pharmacy licenses in 12 states. Amazon also has access to millions of potential patients since it has nearly half of US households signed up for its Amazon Prime service.
Amazon is not the only company using technology to change the prescription drug supply chain. A startup called PillPack focuses on people who manage multiple medications. They collate all your mediations into plastic packets that you can tear open at the right time of day. They deliver a supply of your medicine packets right to your door. According to their website, when you can use their mobile app to interact with a pharmacist, pay your bill, or pause your refills.
CVS is moving forward quickly to address the growing digital component of the last mile of the pharmaceutical supply chain. In the short term, the company has built its own digital platform for consumers and is launching new ways of getting prescriptions to consumers without making them wait in line to see a pharmacist.
First, the company is working on improving the patient experience of ordering a prescription. CVS launched it a prescription management mobile app, which has been downloaded 21 million times. The company also has 50 million people enrolled in its text messaging reminder service.
Second, the company has launched a curbside pickup program. Instead of having to walk into the store, customers can use the CVS app to request their prescription at a nearby CVS location, and an employee with deliver it to them when they pull up to the store.
Finally, on November 6th, CVS announced that they are will offer same-day delivery for prescriptions. They are launching in Manhattan in December and then expanding Miami, Boston, Philadelphia, Washington, DC and San Francisco early in the next year.  They will also be providing next-day delivery across the country.
CVS is preparing for a future in which more of their business is digital. In 2015 the company opened its Digital Innovation Lab in downtown Boston.  In a 2016t interview, Brian Tilzer, CVS Health’s Chief Digital Officer stated that, “Our vision is to create a ‘connected’ health experience that makes it radically easier for people to save time and money—and stay healthy. Imagine being able to easily refill your prescriptions from your couch.” 
While Amazon has yet to publicly launch a pharmacy, CVS needs to stay focused on leveraging their current interaction with customers in their retail pharmacy to drive adoption of their digital platform. They should view each prescription they fill in a retail store as an opportunity to move a customer to their digital platform. Second, they need to make sure they leverage technology to support their push into delivery. Pharmaceuticals are small and high-value, but sustainable delivery economics depends on using data to ensure dense and efficient delivery routes. Third, while there is focus on the last part of the pharmaceutical supply chain, CVS need to ensure they are leveraging technology throughout the pharmaceutical supply chain
As CVS drives forward with its digital efforts, there are many open questions. How are actors across the healthcare industry going to react to the increasing digitalization of the pharmaceutical supply chain? If Amazon decided to commit to the pharmaceutical business, what exactly do you think their offering would look like?
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