January 6, 2021

Amazon Pharmacy: How Will It Affect Pharma?

vitamins in a package

Amazon Pharmacy’s long-awaited debut is worrying many, and there have been no shortage of takes on what it might mean. Let’s sum it all up, and then talk specifically about the implications this might have for pharma.

Amazon’s slow-build master plan for healthcare can be seen with its acquisition of PillPack in 2018, its rebrand to “PillPack by Amazon Pharmacy” in 2019, and now the launch of Amazon Pharmacy proper, which offers not only pack-based combinations, but also standard prescription filling and delivery. PillPack’s CEO, TJ Parker, himself a pharmacist and the son of an independent pharmacist, remains the VP of the division.

While it does accept “most insurance plans,” Amazon Pharmacy also offers Prime members a non-insurance “discount of up to 80% on generic and 40% on brand-name prescription medications. This program is administered by Inside Rx,” which is a division of Express Scripts, itself a division of Cigna.

Retailers and wholesalers, large and small, traditional and online, have all seen this coming for some time. While analysts believe that the launch will primarily affect smaller pharmacies, shareholders of the larger corporations still did react negatively to the news, and stock prices dropped. Moreover, industry experts also suspect that Amazon has larger goals in the long term, suggesting that, like the above-mentioned organizations, it may one day become a PBM itself.

At present, patient reaction is … mixed, to be polite. One online interaction opined (slightly paraphrased), “So they’ll undercut pharmacies, corner the market, jack prices up, and reap all that profit, right?” and the reply was, “It’s not only a new market, but more data. Having data on your illnesses will help Amazon sell other items. Bipolar makes you impulse buy? Amazon knows. Depression makes you crave sweets? Amazon knows. Bezos doesn’t care how predatory this is because he’s a monster and all of humanity is his prey.”

That might be a little apocalyptic, but suffice it to say that there is some suspicion. On the other hand, Amazon’s gift is in improving user experience: making online interactions convenient and frictionless, which is a long-held goal for improving prescription fulfillment, adherence, and compliance.

What It Means for Pharma

In short? It may not require any action yet, but it’s important to keep an eye on.

How this could affect your brands primarily depends upon your brands. Amazon Pharmacy says that it is “for customers 18 years and older, and works best if you fill at least one prescription regularly.” If you have a drug for acute conditions, you may not need to be too concerned.

Similarly, if your brand is a biologic infused by an HCP, or one that is self-injected, or one that is handled by specialty or compounding pharmacies, this may not affect your work in the short term. While Amazon will likely evolve their pharmacy plans, at present they’re simply gaining their footing in the mail-order space.

However, if your brand addresses ongoing conditions, and perhaps particularly if your patients are likely to be on multiple medications, you may want to keep an eye out. Polypharmacy — the use of more than one drug to treat a condition — and its potential for contraindicated drug interactions affects many senior citizens. Seniors, particularly those at home or in assisted-living facilities where their aggregate medications are not monitored by HCPs, are an ideal audience for Amazon Pharmacy and for Amazon PillPack, which may get a boost from the Amazon Pharmacy launch.)

  • Amazon’s effect on pricing is not to be underestimated. Their discounts are currently being handled through a relationship with Express Scripts, the PBM affiliate of Cigna. But how will their Prime discounts play out in the months and years ahead? Will Amazon become its own PBM, and begin to compete there, especially for self-funded employer business? Time will tell, but it’s definitely worth watching, particularly by market-access teams.
  • Should Amazon become a target of opportunity for pharma, who have been calling on payers and large medical groups? It’s early, but it’s certainly worth monitoring, if not considering initiating exploratory conversations. Innovation centers of excellence, in particular, should consider working with their brand teams and market-access teams to determine whether they should be the first “sentries” making contact.

Not underestimating Amazon is sensible. We’re continuing to monitor developments as Amazon’s latest entry into the healthcare space plays out.