18-Jun-15 8:00 AM  CST

Is CVS’s Recent Acquisition of Target Pharmacies Bad For Consumers?

Unless you’ve been hiding under a rock or have had a complete blackout of communication, chances are you’ve heard the news that pharmacy giant CVS has purchased discount retailer Target’s in store pharmacies. A deal that cost CVS Health Corps more than 1.9 billion. CVS will soon take over operation of approximately 1700 pharmacies located in Target stores across the country. This enormous acquisition on the part of CVS has many questioning whether allowing pharmacy giants like CVS and Walgreens to make such deals is good idea.

CVS made headlines last year when it decided to stop selling tobacco products in all of its stores. The move, which cost CVS nearly $ 2 billion a year, was seen as a move forward in the pharmaceutical and healthcare industries. Shortly after that announcement, CVS’s largest competitor Walgreens, followed suit. Although the choice to not sell tobacco products in their stores would ultimately cut into the bottom line profits for CVS, with yearly sells of more than $126 billion its merely a drop in the bucket. With the recent acquisition of Target pharmacies CVS will more than recoup their losses. However, the question many are asking “is this really good for the consumer”.

CVS is the number one pharmacy retailer in the country. CVS Health Corps holds approximately 50% of the retail pharmacy market share in the US. Walgreens, its closest competitor, is second with a 24% market share. Target stores only hold a 4% share of the retail pharmacy market making them the 5th largest retail pharmacy chain in the US. Now that CVS has acquired Target’s share of the market competition has gotten even smaller. So what does this all mean for the consumer? Easy, less competition may translate into higher prices for the consumer.

CVS’s purchase of Target pharmacies essentially leaves the door open for other large retail pharmacies, like Walgreens, to also acquire smaller retail pharmacy markets, which again means less competition in the retail pharmacy market and higher prices for consumers. According to Reuters although Target pharmacies helped to increase the retailers overall sales the adoption and expansion of the Affordable Care Act, which increased the number of insured, had an overwhelming affect on the chain’s pharmacies.

Although the glass may indeed appear to be half-empty to some the CVS purchase of Target store pharmacies does merit some good for the consumer. More stores means more locations available to fill a prescription order, and quite possibly, less waiting time. CVS stated that it would continue to offer $4 and $10 generic drugs to cash paying customers and expand the offer to its Target customers as well. Finally, more stores means a greater ability to track a customer’s profile. In a day when medication safety is of major concern being able to link a customer’s medication profile from one location to another is essential. Whether or not CVS’s purchase of Target store pharmacies is good news or bad news for the consumer still remains to be seen.

Resources:

Cha, A., (2015) , “CVS’S Purchase of Target’s Pharmacy Business: The Good and The Bad For Consumers”, The Washington Post, ,http://www.washingtonpost.com/news/to-your-health/wp/2015/06/15/cvss-purchase-of-targets-pharmacy-business-the-good-and-bad-for-consumers/, retrieved, 17, June 2015

Lutz, A., (2015), “What CVS Buying Target Pharmacy Means For Prices,”, Business Insider, http://www.businessinsider.com/what-cvs-buying-target-pharmacy-means-for-prices-2015-6, retrieved, 17, June 2015

 


For additional information on this article, please contact:
 
Sandra Andrews
(717) 360-1159
 
Source: Sandy Andrews  

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