“Amazon could rename PillPack as ‘Amazon Pharmacy,’ and start right away,” said Talha Sattar, CEO of internet pharmacy start-up Nimble. “The bigger question is about the form that the offering will take.”
Amazon could start by targeting those who pay cash for their meds, either for generic drugs or branded drugs with coupons from companies like GoodRx.
“Day 1, Amazon will likely focus on cash purchases of both generic and brand medicines — all they need to do so is [get] a board of pharmacy license in all 50 states, and dispensing capacity,” said Jonathan Schwartz, CEO of another internet pharmacy start-up, CareZone.
That’s a chunk of a $450 billion market, or about 6 percent of the U.S. population, which includes the noninsured and those with high-deductible plans. It also doesn’t require working with the largest pharmacy benefits managers, like Express Scripts, which are gatekeepers of sorts for those who opt to use their health insurance.
Amazon’s biggest rival, Walmart, already offers a service like this. It’s essentially a list of generic medicines with a $4 price for 30-day prescriptions — no insurance required. Some experts believe Amazon could do its own version of this quickly, and with even lower prices to attract users away from its competitor.
“A company like Amazon could capture $10 [billion] or $20 billion in revenue by doing that well,” said Sattar.
But not a complete offering
Pharmacy experts disagree on whether Amazon will have success forging relationships with pharmacy benefits managers.
An Express Scripts spokesperson said Friday that its agreement with PillPack is expiring in July and that the two companies haven’t yet reached an agreement on rates. The company did not say whether a change in ownership would affect the discussions.
Other pharmacy benefits managers might shy away from maintaining an agreement with PillPack if they see it as a threat.
For that reason, it might take some time before the company is able to offer cheaper, in-network prices on prescription medicines.
Stephen Buck, who previously worked at drug distributor McKesson, suspects that it would be more than a year before that happens because he believes Amazon will be slow and deliberate with its rollout. Amazon might pick a small market, like a single state, to pilot the offering before expanding to others. PillPack operates in 49 states.
The ABC factor
Amazon is also a partner with J.P. Morgan and Berkshire Hathaway in a program to fix heath care for their employees.
The PillPack offering might come in handy as the partners look to distribute affordable medicines to their 1.2 million combined workforce. Atul Gawande, the group’s recently named CEO, recently spoke about his plans to target waste in the health-care system, including high prices associated with things like administrative costs and prescription medicines.
But it’s possible that Amazon will work more quickly on its own. Gawande has made clear that disrupting the health industry could take decades — and Amazon typically works far more quickly than that. “Amazon is not known for doing things slowly,” Sattar said.
Article by:
Reporter for CNBC.com
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