Amazon appears to be expanding into the retail market in health care with its plan to purchase PillPack, an online pharmacy that is growing quickly. Stat News reports that PillPack sells and distributes prescription drugs to chronically ill people needing multiple medications. It operates in all but one state.
The question is whether Amazon can build on its enormous platform to take over a big share of the retail prescription drug business. PillPack still has only a small share of the business, with about 40,000 patients. And, some suggest that pharmacy benefit managers, who are gatekeepers of the drugs health insurers cover, may not be inclined to work with Amazon.
Moreover, some question Amazon’s ability to translate its expertise and success in satisfying people’s on-demand purchasing desires to the sale of drugs to chronically ill patients. How much do these individuals value the “human touch,” which Amazon has never provided; and, how much do they value lower costs? Or, is Amazon prepared and able to deliver these patients a higher level of services than it currently delivers?
It is still unclear how Amazon will insert itself into the health insurance industry. But, for sure, it can distribute drugs to the one million employees at Amazon, Berkshire Hathaway and JP Morgan.
And, Amazon’s plan to expand into the sale of prescription drugs is disrupting the pharmacy distribution business and forcing the biggest players to rethink their business strategies. Mergers are in the making. It appears that Amazon is in some part responsible for CVS Health’s interest in buying Aetna. And, Cigna is partnering with Express Scripts, one of the largest Pharmacy Benefit Managers.
Time will tell whether Amazon will succeed in the prescription drug space. It certainly has the resources to make a strong effort.
Of course, in the best of all possible worlds, Congress will step in and negotiate prescription drug prices across the board through international reference pricing–setting prices at the average of what the Germans, the Japanese and other peer countries pay–the most practical and feasible way to cut drug prices in half and save more than $200 billion annually in prescription drug spending.
If you believe Congress should step in to rein in drug prices, please sign this petition.
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