CVS, Healtheon Strike Content Deal

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CVS.com has dislodged rival drugstore.com to become the exclusive online pharmacy for healthcare content provider Healtheon/WebMD's Web site and portal partners Lycos, Excite@Home and the Microsoft Network.


The five-year deal guarantees CVS.com 1 billion impressions through its presence on WebMD.com and its health channels across the three high-traffic portals. An estimated 50 million online pharmacy transactions are expected to occur in the next six months on the Healtheon/WebMD network.


"This partnership represents another step in CVS' strategy to become a leader in the online pharmacy space," said Rachel Templeton, spokeswoman at the Seattle-based online pharmacy arm of CVS Corp. "For CVS, the goal is to leverage the name and marketing prowess of Healtheon/WebMD."


The deal comes three months after CVS.com was named sole Internet retailer of nonprescription drugs and general healthcare products to 51 million Americans who use pharmacy benefit manager Merck-Medco Managed Care's plans.


Both CVS.com and Healtheon/WebMD intend the alliance to be viral in nature, driving traffic, building brand and raking revenue. The financial terms were not disclosed.


The first components of this co-branding cooperation will roll out this quarter, with total integration by June, Templeton said.


Under the deal, Healtheon/WebMD will create special health content on the CVS site and its sister CVS Procare specialty offline pharmacy. In addition, Healtheon/WebMD will support a "News of the Day" feature on the CVS.com home page. CVS customers also will have access to WebMD.com's "myhealthrecord" feature.


In return, the WebMD logo will run prominently on the title bar of the CVS.com home page. WebMD will reciprocate with a "CVS Pharmacy" tab or button on each page of its site. Clicking on either takes the consumer to the respective sites.


"By clicking on CVS Pharmacy links in the WebMD consumer site, WebMD customers will have full and exclusive access to prescription and over-the-counter medications and thousands of other healthcare and beauty items on CVS.com," Templeton said.


WebMD links on CVS.com will take consumers to a new health center area hosting the CVS.com/WebMD.com health community, which features health-related news of the day.


But it is the offline help from CVS/pharmacy stores that is expected to drive traffic to WebMD.com. The site's Web address will be displayed through window banners in 4,100 CVS/pharmacy stores and assorted in-store signage. And the WebMD logo will be displayed on CVS shopping bags, a billion of which are carried annually by store customers.


Also, CVS weekly circulars to millions of its customers, mostly east of the Mississippi, will plug WebMD. The companies also plan a joint ad campaign to promote both brands.


Both companies will soon start work on building a standard, end-to-end solution for generating, transmitting and filling prescriptions electronically.


This works into CVS' plans to develop a paperless, electronic pharmaceutical transaction process for physicians, CVS and Merck-Medco pharmacy benefit managers, third-party payers and consumers.


CVS.com aims to convert traffic from Healtheon/WebMD and its portal partners into sales, hoping the consumer who trusts such health content is convinced to buy health products from an ally. In return, CVS.com will pay Healtheon/WebMD transaction fees and revenue from click-through impressions.


"Both parties, through online, offline and media marketing, will promote benefits of the partnership," CVS.com's Templeton said. "We believe these benefits will translate to an increased market cap for the company."
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