Bezos Becomes A Drug Lord

Waiting to pick up a prescription at the pharmacy can be dangerous…half an hour wandering around CVS can lead to any number of unnecessary purchases.

Amazon is launching a new drug delivery service called Amazon Pharmacy to help people get their medication without the wait and without leaving home.

PHARM-AZON

In 2018, Amazon bought pharmaceutical delivery startup PillPack for just under $1 billion.

PillPack’s healthcare industry relationships and fulfilment centers have laid the foundation for Amazon Pharmacy.

How It Works: After creating a “secure pharmacy profile,” customers in 45 states (more to come) can perform a slew of maneuvers directly on Amazon’s main retail site:

  • Shoppers can add insurance info, manage prescriptions, and even speak to a pharmacist online or over the phone. The service accepts “most” insurance plans and also caters to the uninsured.
  • Amazon Pharmacy offers generic and brand-name drugs, but won’t sell high-risk items such as opioids.

As usual, there are bonus perks for Prime members including the service’s ubiquitous free two-day delivery.

Members without insurance also get up to 80% discounts on generic and 40% discounts on brand name medicine.

HEALTH SCARE FOR TRADITIONAL PLAYERS

Have you been to a Borders bookstores lately?

Rival drug stores felt the pain yesterday as investors grew concerned Amazon would disintermediate brick-and-mortar pharmacies and pressure margins. CVS shares dropped 8.6%, Walgreens was down nearly 10%, and Rite Aid tumbled 16%.

But some industry executives downplayed concerns. Rite Aid’s chief operating officer told the WSJ, “Pharmacy is not just a shopping transaction,” citing his companies’ role in providing annual vaccinations.

The Takeaway

Mail-order prescriptions accounted for just 5.8% of the prescription drug market last year. Plenty of white space for Bezos.