Sorry CVS, Maybe I’ll Ask Alexa?

In 2016, 4 billion prescriptions were filled in retail pharmacies. Technology is changing this process.

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.[1] 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.[2] 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.[3] Only 20% of CVS prescriptions involve a clinical interaction that requires interacting with a pharmacist, leaving significant room for a digital-first competitor.[4] Amazon has already acquired pharmacy licenses in 12 states[5]. Amazon also has access to millions of potential patients since it has nearly half of US households signed up for its Amazon Prime service.[6]

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.[7] The company also has 50 million people enrolled in its text messaging reminder service.[8]

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. [9]  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. [10]  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.” [11]

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?

Word Count: 712


[1] The Kaiser Family Foundation, “Total Number of Retail Prescription Drugs Filled at Pharmacies” (2016), accessed November 13, 2017,,%22sort%22:%22asc%22%7D

[2] CVS Health, accessed 13 Nov. 2017,

CVS Health First Quarter 2016 Earnings Conference Call, accessed November 12, 2017,

[3] Christine Farr, “Goldman Sachs Breaks Down How Amazon Can Jump Into Health Care” (August 11, 2017),, accessed November 13, 2017,

[4] CVS Health Third Quarter 2017 Earnings Conference Call, accessed November 12, 2017,

[5] David Mayer, “Amazon Had Reportedly Won Approval for Wholesale Drug Distribution in 12 States,” (October 27, 2017) Fortune, accessed November 14, 2017,

[6] Lauren Thomas, “Amazon Prime will be in More Than Half of US Households by Year’s End” (August 8, 2017),, accessed 13, Nov. 2017,

[7] CVS Health Third Quarter 2017 Earnings Conference Call, accessed November 13, 2017,

[8] Ibid.

[9] “CVS Pharmacy Brings Prescriptions Right to Customers Doors Nationwide the Next Day,” CVS Health press release (Woonsocket, RI, November 6, 2017),

[10] Michael Fitzgerald, “Not Just A Pharmacy: CVS Unveils Its Digital Innovation Lab,” (June 19, 2015) Fast Company, accessed November 13, 2017,

[11] Erika Garvin, “CVS Health Executive Talks Integration of Digital Health Tools for Pharmacy,” (February 8, 2016), HIT Consultant, accessed November 14, 2017,


Guinness and Brexit: What’s it all A-stout?


M.Gemi – Italian Fast Footwear

Student comments on Sorry CVS, Maybe I’ll Ask Alexa?

  1. A really interesting extension of this is the potential Amazon has to reduce the cost of drugs for the American consumer. If they set up e-pharmacies and contract with generic drug makers, the next step is to partner with branded manufactures. Then, a lot of the volume and rebate discounts that are being held by intermediaries and plan sponsors could be passed back to the consumer.

    Consider as well, the impact to the small businessman: 80% of independent pharmacies are in towns with fewer than 50,000 residents. Amazon would almost certainly spell their demise.

  2. Mr. Harvard, I enjoyed your writing and recommendations to CVS. My question is if they have the ability to change customer behavior for older customers which constitute a large majority of prescription sales? It would definitely be a smart (very) long-term play to capture younger generations age they age, but CVS will need to find creative ways to bring its customer base along for any initiative to work in the short-term.

  3. The article brings up a salient point – I had not considered the Amazon-ization of the pharmacy industry before, but the traditional pharmacy model is on the verge of extinction. While CVS is planning to offer free one-day delivery nationwide by 2018, one must ask at what cost? This is an expensive undertaking but clearly a “need to do”, not a “nice to do”. Amazon could surely provide this delivery service cheaper, especially in more remote areas, given its expansive distribution network and economies of scale. I believe Amazon may squeeze out players like CVS and Walgreens in the long-term but with so many sprouting ideas under its umbrella, it is unclear where e-pharmacy is on Amazon’s list of strategic initiatives. The trouble with Amazon as a competitive threat is that it is a very reputable, reliable brand in the eyes of consumers so there is likely going to be little push back from end-consumers – as long as they get their correct medications on-time.

    To your question of how actors across the healthcare industry are going to react to the increasing digitalization of the pharmaceutical supply chain – there are rumors on Wall Street that the health insurer Aetna and CVS may merge. This would help CVS in its fight to reduce competitive threat from Amazon entering into the space as a merger with Aetna (valued at $70 billion) would give CVS more leverage in its price negotiations with drug makers (1).

    Jeff Bezos’ original concept for Amazon was for it to become an “everything store” and seems that pharmaceutical offerings would be an important part of achieving this aspiration.


  4. Thanks for sharing this paper- it’s amazing how many different parts of the economy are being disrupted by Amazon and other delivery services in real time. As I read your paper, I couldn’t help but think that something about healthcare feels harder to disrupt with a purely digital service vs. other industries. While you mention that 80% of prescriptions do not require pharmacist interaction, CVS should focus its energy on increasing the importance of its role in the value chain for those 20% of prescriptions that do require an interaction. To the extent CVS can partner with players like Amazon for more generic drugs and seek to add value for more complex prescriptions (whether it be through mixing drugs, providing content/advice/other services around drug delivery), they should be able to carve out those areas of the supply chain that require more pharmaceutical expertise. I could foresee greater regulation / controls around drug administration given the ongoing opiod epidemic and CVS would be smart to find ways to lead the ability to digitize the supply chain for more complex prescriptions while being a champion of excellence in the administration of more complex prescriptions or drugs requiring higher levels of oversight and regulation. I worry about what the digitization of the pharmaceutical supply chain might mean for control over the dissemination of drugs to the wrong users and think CVS could play a crucial role in getting ahead of these issues and bringing them to light before it is too late.

  5. As CVS Health and other healthcare providers begin to test the digital waters, I suspect that another opportunity for consumer touch points is with drug compliance. Beyond the supply chain efforts, a major challenge for the healthcare industry is enforcing the routine and compliance of prescription medications without which a patient will see worse health outcomes. The cost to payors and providers of non-compliance is massive, especially as uncontrolled chronic disease can result in preventable hospital expenses. I would not be surprised to see CVS seek out competitive edge over Amazon with value-add digital services that provide reminders and compliance tracking.

  6. Mr Harvard, I agree that CVS is threatened by the looming digital transformation of the pharmacy supply chain. However, I wonder if they are embarking on a fool’s errand by attempting to compete with Amazon in prescription delivery. It seems unlikely that CVS could achieve the necessary logistical scale and expertise to beat Amazon in the home delivery space. By pushing consumers towards this model, CVS may be paving the way for Amazon to enter the pharmacy delivery market and steal their customers. Instead, CVS could focus on more value-added digital services that leveraging their existing network of local pharmacists.

  7. I think it makes a lot of sense that CVS is moving towards digitalization of services–customers nowadays expect fast delivery service to the home more than ever. However, I have two questions:

    1. Does CVS’ size and scale protect them from other competitors like Amazon, who have never been in the pharmacy business, from taking market share? In the US, Walmart and CVS make up at least half of the drugstore retailers in every major city [1]. I would imagine with this kind of scale, they are able to negotiate much lower costs for branded drugs and biologics with the manufacturers, and have scale to lower distribution costs. CVS also plays a unique role as a pharmacy benefit management, further locking in customers into its network. Finally, distribution of drugs will also have its own set of regulatory hurdles that Amazon will have to face for the first time. Although Amazon would be able to leverage its distribution market, I am wary of how quickly it can enter the pharmacy world.

    2. How would digitalizing the pharmacy affect CVS’ front-store revenues? Currently, I would imagine that customers that come into a CVS store to pick up a prescription will likely also pick up a few retail items in the retail section of the store. By eliminating that foot traffic, or redirecting them to a drive-through where they don’t walk through the front-store, I would imagine that they would see a drop in retail revenues as well. In this environment where brick-and-mortar retail sales are struggling to keep up with e-commerce, that may drive a significant impact to front-store revenues.

    [1] Corey Stern, “CVS and Walgreens are completely dominating the US drugstore industry,” (July 30, 2015), Business Insider, accessed November 30, 2017,

  8. Insightful and interesting read! I agree with Tom Richardson that it is not very feasible for CVS to enter the pharmacy delivery market and compete with Amazon in a short term horizon. For CVS, I would suggest automating its supply chain by improving big data analytics to make accurate predictions on customers’ next prescription and its frequency. Automation may require a large up-front investment but will effectively equip CVS with an integrated order traceability from manufacturing to customers. Additionally, automated handling and distributing prescription medications will reduce labor cost and speed of prescription fulfillment significantly, which will bring a large return on investment in a long run.

  9. This is a well written report on the threat of technology to drug delivery. Pillpack and CVS has been increasingly powerful, and as such have built a great data system on its customers. To your question about the threat of amazon, I don’t believe this is a core part of Amazon’s strength because of the nuances involved in drug delivery. There are many parties to attend to: doctors, regulators, drug suppliers, customers (more importantly data on customer behavior and value perception), etc., and I don’t believe Amazon has built those capabilities yet. You could argue that those could be built, but it’s going to take a long time to build such capabilities. One could argue that Pillpack and CVS are way ahead of that curve.

  10. I agree with all the comments above suggesting that CVS’ best bet is to differentiate based on value-added services related to their core expertise. I hadn’t heard that Amazon was looking into pharmacy services, and now I am very interested to learn more. Amazon is the prime (hah) example of a supply-chain company – while they started as a bookseller, now they are seeking to become a one-stop shop for anything and everything that consumers might need, and their scale and ability to deliver products extremely fast is their key advantage. I worry about one company becoming a monolithic supply chain for many types of products, and adding healthcare data to the mix makes me even more concerned. How might Amazon use my prescription data (including whether or not I am compliant with my medicines) to cross-sell me other services? How will this fit in with other services they are developing? CVS could think about using this uncertainty to emphasize their longstanding experience in the pharmacy field as a way to differentiate based on quality and trust.

  11. I like Bismah’s view on this. As the threat of Amazon looms to extend their reach into healthcare, the Aetna and CVS merger is a defensive alliance ( It’s a strategic move that has the humility to admit Amazon could enter and win the market. The alliance lacks the hubris of Walgreen’s CEO, “They [Amazon] will not come in an industry so complicated as our industry,” ( Amazon’s deep pockets of $22 billion (, and distribution network, make them a threat to CVS and they have the foresight to defend against the internet giant.

  12. Very interesting look into a massive market opportunity to disrupt the traditional pharmacy industry. I imagine that Amazon’s offering would tie directly into Amazon Prime, where customers would upload a prescription via the web or mobile app, have a doctor confirm the prescription, and then once approved, tap directly into Amazon’s incredible distribution network, in which customers enjoy same-day delivery. To Lev’s point, I am not sure why it would be that difficult for CVS to get into the pharmacy delivery business. I am pretty encouraged by the innovation that CVS has demonstrated through its mobile app, curbside pickup program, and same-day delivery. As a business with a $77B market cap that has demonstrated an ability to make bold moves (ie Acquiring Aetna for $66B), CVS should monitor the startup growth in the market and constantly consider whether they should “buy or build.” Over the long-term, to compete with Amazon, Pillpack, which is the leading startup in the category, could be a very interesting acquisition target for CVS.

Leave a comment