Target opening CVS pharmacies in stores is scary news for consumers

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patients at cvs pharmacy in target 4 HR

CVS Health

This week, CVS is opening its first pharmacy inside a Target store.

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Over the next six to eight months, all 1,660 of Target's pharmacy locations will become CVS-branded units. Additionally, the discount retailer's 80 in-store health clinics will rebrand as CVS MinuteClinic locations.

When CVS announced its $1.9 billion acquisition of Target's pharmacy business in June, many worried it could set off a series of similar partnerships as cost pressures hurt profits at grocery-store pharmacies. In October, Walgreens and Rite Aid - the second- and third-largest pharmacy chains in the US, after No. 1 CVS - announced a $9.4 billion merger.

While these acquisitions may help the bottom line at companies, it could be bad news for shoppers.

Mergers mean less competition in the market, which could lead to higher prices for consumers. If CVS and Walgreens acquire more pharmacy businesses, this effect could be even greater.

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The mergers additionally significantly reduce competition in the retail clinic business, reports the Washington Post's Ariana Eunjung Cha. The acquisitions combine the No. 1 provider of retail clinics (CVS MinuteClinic) with the No. 5 provider (Target), as well as the No. 2 provider (Walgreens) with No. 6 (Rite Aid).

Generally, more competition means lower prices for consumers.

The Post also notes that the deals could result in conflicts of interest.

A CVS pharmacy is seen in New York City July 28, 2010. REUTERS/Mike Segar

Thomson Reuters

A CVS pharmacy is seen in New York City

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"Some analysts worry that medical professionals staffing retail clinics could face pressure to overprescribe in order to boost their employers' bottom lines," Cha writes.

Target and CVS maintain that the change will simply increase convenience and accessibility for consumers.

"Our heart is in every prescription we fill, and providing accessible, supportive and personalized health care is part of our DNA," Helena Foulkes, the president of CVS Pharmacy, wrote on CVS Health's website on Wednesday. "On behalf of all of us at CVS Health, I am delighted to invite Target guests to experience our innovative pharmacy care services and unique digital offerings."

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