drugstore.com, inc. and Evolution Benefits Make It Easier to Manage FSA-Eligible OTC Medication Expenses.

Business Editors

BELLEVUE, Wash. & AVON, Conn.--(BUSINESS WIRE)--March 3, 2004

drugstore.com, inc. and Evolution Benefits Inc. are introducing an innovative online system to make it easy for participating consumers to automatically track and submit expenses for over-the-counter (OTC) medications eligible for reimbursement under flexible spending accounts (FSAs). Holders of the Evolution Benefits Benny Card(TM), a special-purpose, debit MasterCard(R), can now shop at the drugstore.com(TM) online store and take advantage of automatic reimbursement for more than 2,100 OTC medications eligible for FSA reimbursement. Products and medications typically eligible for FSA reimbursement have been tagged with an on-screen icon for easy identification on the drugstore.com(TM) Web site.

"Flexible spending accounts provide substantial costs savings for consumers, but keeping track of all the receipts for FSA-reimbursable OTC products has been a hassle," said Jeff Kimmell, vice president, pharmacy services of drugstore.com, inc. "The drugstore.com(TM) FSA Manager program simplifies the process by automatically deducting FSA purchases from the customer's FSA account in real time."

When a participating cardholder shops for medications at the drugstore.com(TM) Web store, the FSA Manager program automatically separates eligible and ineligible OTC products, along with any prescription drugs purchased, and puts them into separate baskets. The cardholder can then pay for eligible OTC products and prescriptions using the Benny Card. The cost of those items is automatically deducted from the customer's FSA account in real time, and, if necessary, the customer will have record of the transaction.

"As a growing number of popular medications such as Claritin and Prilosec have moved to OTC status, many consumers have had to grapple with larger out-of-pocket expenses, in addition to taking on a greater share of health care costs at work," observes Christopher Byrd, executive vice president of Evolution Benefits Inc., which produces the Benny Card. "And although the IRS ruling came as welcome news, the need to substantiate those OTC purchases presented a new administrative burden for consumers -- a burden Evolution was well equipped to handle since we were the first to introduce electronic substantiation to the group benefits marketplace."

Reimbursement of OTC products through FSAs is a benefit authorized last year by the Internal Revenue Service.

"We're delighted to be working with drugstore.com(TM), one of the Internet's most trusted and recognizable brands," continues Byrd. "It's a terrific opportunity to bring together two brands that represent ease and convenience in the minds of consumers."

"Flexible spending accounts are a great, untapped resource for offsetting increases in health care costs," Byrd adds. "Every dollar employees contribute to FSAs reduces their taxes, which in turn reduces the cost of a variety of medications: antacids, pain relievers, allergy and cold medications, to name a few of the 80 different classes of OTC drugs on the market. Every purchase adds up, large and small, prescription and nonprescription, so by the end of the year, there's less risk of having health care reimbursement funds left over."

About drugstore.com, inc.

drugstore.com, inc. (Nasdaq:DSCM) is the leading online health, beauty, wellness, personal care, vision, and pharmacy solution in the world. The drugstore.com(TM) online store provides a convenient, private, and informative shopping experience that encourages consumers to purchase products essential to healthy, everyday living. The online store offers thousands of brand-name personal health care products at competitive prices; a full-service, licensed retail pharmacy; and a wealth of health-related information, buying guides, and other tools designed to help consumers make informed purchasing decisions. Consumers can personalize their shopping experiences with shopping lists, e-mail reminders for replenishing regularly used products, and private e-mail access to pharmacists and beauty experts for questions.

drugstore.com, inc. has been awarded the Verified Internet Pharmacy Practice Sites (VIPPS) certification by the National Association of Boards of Pharmacy (NABP) as a fully licensed facility exercising competent, safe pharmacy practices in compliance with federal and state laws and regulations

About Evolution Benefits Inc.

Evolution Benefits Inc. was founded in 2000 with a commitment to supporting the movement toward offering consumers greater choice in and responsibility for managing their benefits through its innovative product, the Benny Card. Adopted by some the nation's most prestigious employers, Benny applies advanced payment technologies to flexible spending, health reimbursement, health savings and transportation management accounts, creating a bridge between traditional benefit structures and the emerging self-directed benefits movement. More information is available at www.EvolutionBenefits.com.