CVS Caremark Corporation (CVS), Walgreen Company (WAG), Rite Aid Corporation (RAD): One Company Wanting to Buy Your Health Privacy

This privacy policy goes beyond what the HIPAA Privacy Rule allows for protected health information (which includes prescription drug purchases). My guess is that CVS Caremark’s legal eagles wanted to put the HIPAA authorization in place to at least keep the door open for sharing prescription drug purchase information with third parties at some point like it does for other purchases. To actually do so, though, would be a very unwise move for CVS because of the negative publicity it would undoubtedly bring.

Rewarding

There’s no question that the reward programs have been highly beneficial for CVS. CEO Larry Merlo noted recently that the ExtraCare program boosts both sales and margin. The overall program has been in place for 15 years and now counts more than 70 million members.

And despite some of the controversy over how it handled HIPAA privacy, the expansion of ExtraCare to cover prescription drugs looks to be doing well. Mark Cosby, CVS Caremark Corporation (NYSE:CVS) executive vice president and CVS/pharmacy president, said two weeks ago that 3 million customers had enrolled.

Rite Aid Corporation (NYSE:RAD) has also experienced solid success from its program, which was launched in 2010. In June, the company stated that its loyalty program had 25 million members. During the fiscal 2014 first quarter, Rite Aid Corporation (NYSE:RAD) said that program members accounted for 70% of prescriptions and 77% of front-end sales.

Walgreen Company (NYSE:WAG) initiated its program in September 2012 and already has a whopping 79 million members. The company said recently that 60% of store purchases were made using the loyalty card.

Shareholders might be receiving even more rewards from these loyalty programs than customers are. So far this year, all three of these big pharmacy chains have handily beaten the major indexes. The better CVS, Rite Aid Corporation (NYSE:RAD), and Walgreen Company (NYSE:WAG) get at personalizing marketing efforts, especially with prescription drug information in the mix, the higher those shares could go.

The article 1 Company Wanting to Buy Your Health Privacy originally appeared on Fool.com and is written by Keith Speights.

Fool contributor Keith Speights has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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