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Amazon Announces Pharmacy Services

/ November 20, 2020 November 20, 2020

This week, Amazon announced Amazon Pharmacy – the elevation of pharmacy services through the platform. This is the next large step beyond the PillPack acquisition in 2018. Amazon says that Prime members can get discounts of up to 80 percent on generic drugs and 40 percent on brand-name medications when paying without insurance. This was an interesting market reaction, as other major pharmacy retailers – CVS, Walgreens, and Rite Aid–all had stock tumbles on Tuesday in response to this announcement.

Why, now, is Amazon expanding their services in the pharmacy industry? Well, we all have speculations inside pharmacy – some of which are below:

  1. Mail Order Tested During First COVID-19 Lockdown: There was a stockpiling effect of maintenance medications during the first US COVID-19 lockdown periods, as reported by a major data warehouse analytics firm, IQVIA. At the middle of March, we saw a huge increase in refills of prescription medications, followed by a lull until a pickup in June 2020. This is a signal that mail-order prescription and for that matter, retail 90-day supply refills were popular during this period of time when people were instructed not to go out in public.
  2. Safety Factor: This mail order opportunity leads to a remnant of the first lockdown and now as we resurge with cases – a safety factor. If you can get your prescriptions filled from the safety of your home, why not use the service during the second potential lockdown periods?
  3. Working Backwards: Amazon’s acquisition of PillPack was actually a smart move because PillPack served the patients with the greatest prescription needs. PillPack is designed as a medication adherence platform for patients taking multiple medications with tear-off blister packages of medications throughout the day. In essence, when Amazon acquired PillPack, they began with a company that had the heaviest users of prescription medication and then worked backward into a population that does not need as many maintenance medications today with Amazon Pharmacy. By starting with the toughest customer in pharmacy, Amazon Pharmacy could work backward and figure out streamlined ways to serve the most challenging customers, then back to those with less prescription drug challenges.
  4. Merry Medications?: Amazon may be speculating that with holiday sales and shopping coming up, combined with more stay-at-home holiday shopping, now could be a great time to test the waters with pharmacy and prescriptions as people will be buying anyway. Why not toss in a refill of a drug on top of the toys for the kids?

However, there are some caveats to using Amazon Pharmacy. They are not yet licensed in all 50 states in the US as of this writing (they are licensed in the State of Indiana). Furthermore, if you have prescription insurance, you need to ask your pharmacy benefit manager if Amazon Pharmacy is a covered pharmacy inside your pharmacy PBM network. Otherwise, you may just end up paying cash for the prescription. However, with big discounts for Prime members – could Amazon make prescription drug coverage irrelevant?

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Article written by Erin L. Albert, MBA, PharmD, JD, PAHM