It’s official. After months of talk about Amazon’s move into the pharmaceutical space, Amazon has announced that it will now be selling prescription drugs across the US through Amazon Pharmacy. And, big pharmacies, like CVS Health, are feeling the hit, with their stock prices falling. Time will tell whether Amazon will take over the prescription drug retail market.
For the last several years, Amazon has been seeking licenses from states to be a wholesale distributor of prescription drugs. And a couple of years ago, Amazon bought PillPack, which delivers prescription drugs to people in packages that help them know when to take different drugs.
Amazon now plans to sell prescription drugs directly to individuals online and in collaboration with pharmacies across the nation. Many local pharmacies as well as big chain pharmacies are likely to be hit hard. Without a doubt, Amazon will aim to price its prescription drugs below its competitors to squeeze them out of the market.
Of course, if Amazon is successful and the competition withers on the vine, Amazon will be sitting pretty. It will have the market power to raise prescription drug prices and profit handsomely. Even if Congress does not step in to regulate drug prices, which is particularly unlikely with Mitch McConnell as Senate Majority Leader, the only possible downward pressure on prescription drug prices could come from the federal government lifting the ban on drug importation for personal use.
Amazon Pharmacy starts off with a strong foundation of 100 million Prime customers to whom to market its prescription drugs. It will offer Prime customers a discount drug card program–as much as an 80 percent discount on generic drugs and as much as 40 percent off on brand-name prescriptions, for people who pay out of pocket and not through their health insurance.
Amazon also will help people understand the difference between their out-0f-pocket costs with and without insurance. In some cases, copays are so high that it will be less expensive for people to buy their drugs without relying on insurance.
If you use Amazon Pharmacy, you will be able to benefit from its drug prices at 50,000 retail locations around the country as well as online. It will be interesting to see how sizable Amazon Pharmacy discounts will be relative to drug copays for people with insurance. Even without Amazon in the market, sometimes the copays are higher than the full retail cost of the drug. Amazon plans to work with Evernorth, a Pharmacy Benefit Manager, to administer its prescription drug retail program.
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