CVS, Healtheon in pact

January 10, 2000: 2:41 p.m. ET

Drugstore chain to be exclusive pharmacist for online health site

NEW YORK (CNNfn) - CVS Corp., the No. 2 U.S. drugstore chain, and online health care network Healtheon/WebMD announced an alliance Monday to create a Web-based pharmacy service linking patients, suppliers and prescription drug benefits managers.
    Financial terms were not disclosed.
    The alliance reflects the growing number of people buying health care products over the Internet.
    Customers will be able to purchase prescription drugs, over-the-counter medicines, vitamins and other items from CVS’s online arm, CVS.com, as well as gain access to Healtheon/WebMD’s offerings of disease information and chat rooms.
    Woonsocket, R.I.-based CVS (CVS) is the second-largest U.S. drugstore chain, after Walgreen Co. (WAG). Over the next six months, CVS will switch about 50 million electronic pharmacy transactions to the Healtheon network.
    Atlanta-based Healtheon/WebMD (HLTH) was formed by the November merger of Healtheon, which targets the back-end of health care billing and administration, with the doctor- and consumer-oriented WebMD. (CNNfn’s parent company, Time Warner Inc., has a small equity stake in Healtheon/WebMD and a content relationship with the company.)
    Prescription drugs are seen as one of the most potentially lucrative sectors of the burgeoning electronic commerce industry because the pharmaceutical industry is so massive. Internet research firm Jupiter Communications forecasts that the online market for prescription drugs will grow from virtually zero in 1998 to 0.6 percent, or $966 million, of the estimated $161.5 billion pharmaceutical market in 2003.
    Last year, CVS announced an Internet alliance with the prescription drug management unit of Merck & Co. (MRK), the country’s largest pharmaceutical maker. Under that deal, CVS will be able to accept prescription orders from Merck-Medco Managed Care LLC's estimated 50 million members over the Internet.
    CVS shares fell 15/16 to 36-11/16 in Monday afternoon trading. Healtheon/WebMD slipped Ľ to 37-7/8.

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