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Accept allies with Rite Aid, GNC

Rite Aid and GNC each take a stake in the online pharmacy in return for exclusive rights to sell through the site.

One month after drugstore chain CVS jumped online by buying, has inked its own heavyweight deal.

Rite Aid will invest $7.6 million and General Nutrition Centers $2.5 million--both in cash--in to own 25.3 percent and 8 percent of the company, respectively. Both Rite Aid and GNC will make their exclusive online retailer, meaning each will direct customers who want to order products online to

In addition to the financial windfall, the Rite Aid investment should allow more than 50 million people to apply their health insurance toward prescriptions bought on, according to David Restrepo, health care analyst at Jupiter Communications.

Health insurance has been a thorn in the side of online pharmacies. Health insurance companies usually have exclusive arrangements with pharmacy chains that are brokered by third parties called Pharmacy Benefit Managers (PBMs). But PBMs typically have their own mail order businesses, which represent half of the overall prescription market, according to Restrepo, and it's not a piece they've been willing to surrender to online pharmacies.

As a result, PBMs have held off on signing affiliation deals with firms such as and

But through its alliance with Rite Aid, gets access to Rite Aid-owned PCS, one of the leading PBMs. In the process, gains a captive audience. PCS's some 50 million customers will only be able to order through if they want to get their prescriptions online.

Neither nor Planet Rx can claim such a large, captive audience.

"It means that Drugstore has a huge leg up on its competitors," Restrepo said. spokesman Mitchell Reed said his company didn't see the deal that way.

" has their first leg over the fence," Reed said. "When they have their second leg up and standing on the same ground we've been standing on, we'll be much more interested."

Reed downplayed's pharmacy potential, noting that CVS is also affiliated with some 9,000 health plans in the United States. Customers will be able to use their health insurance to pay for a prescription at CVS stores and, he said.

Planet Rx, the other major online player, is not linked with a brick-and-mortar pharmacy. Stephanie Schear, the company's co-founder and vice president for business development, said Planet Rx doesn't see that as a necessity.

"Consumers like the idea of a Net pure play," Schear said.

Shear did say that Planet Rx was in "strategic discussions with a lot of companies," but declined further comment. filed for an initial public offering last month--two days after the Soma-CVS deal. The company filed to sell up to $67.5 million worth of stock, but has not yet stated how many shares it will sell or set a target price for them.

Taken at face value, the deal values at about $30 million, the amount CVS paid to acquire launched its site in February with backing from According to regulatory filings, currently owns 43.8 percent of the company, though the Rite Aid and GNC deals will dilute Amazon's stake, a Drugstore spokeswoman said.