Last news analysis

Amazon attacks the US pharmacy market

From our correspondent Washington: Luke Watson - 23 november 2020

American pharmacies and drugstore chains have a formidable new competitor: Amazon. The giants of the sector, CVS, Walgreens and RiteAid, but also the pharmacies of large low-cost distribution, such as Walmart and Costco, have been expecting for months such an official announcement, likely to upset the market of 300 billion dollars from the sale of drugs in the United States.

The news was indeed anticipated, insofar as the acquisition of PillPack in 2018 by Amazon, for $ 753 million, had already alerted the profession of the intentions of the firm of Jeff Bezos. PillPack specializes in the mail order of multiple drugs, prescribed on a recurring basis and packaged in specific doses recommended by physicians.

The US market is essentially made up of 50 separate markets, governed by their own state regulations. The mail order sale of medicines is therefore a complex activity. Especially since, in addition to the rules applicable in each state, the pharmacist must also manage the relationship with the multiple private insurers who take care of part of the payment for the products, obtain preferential rates and are themselves subject to laws. variables depending on the state.

This explains why Amazon Pharmacy is currently only available to residents of 45 states. Residents of Hawaii, Illinois, Kentucky, Louisiana and Minnesota will have to wait a few months before they too can order their drugs on Amazon's new platform.

Considerable purchasing power
The commercial potential of the latter in the pharmacy is considerable because the online commerce giant has a hundred loyal customers in the United States who subscribe to its "Amazon Prime" service: for an annual subscription of 119 dollars per year, they benefit from free delivery of millions of products.

Naturally Amazon Pharmacy undertakes to deliver free of charge in two days, maximum, the drugs ordered by its subscribers. The others will also be delivered free of charge, but within a period of five days. Unless they agree to pay an additional $ 5.99. All customers regardless of their category are warned: the first order may take up to five days. Verifying the authenticity of prescriptions sent directly to Amazon by doctors is one of the challenges of the service offered.

Another obvious fact: Amazon's buying power has given Amazon Pharmacy the necessary credibility to negotiate discounts with laboratories, particularly those specializing in generic drugs. The new Amazon subsidiary called on Evernorth, a company well established in this niche of intermediaries that Americans call "Pharmacy benefit managers" (PBM). One of Amazon's selling points is that these discounts, which can range from 40 to 80% off the regular price, will be offered to customers who come without insurance. This is not always the case in other distributors.

For the millions of people with chronic illnesses, such as diabetes, or high blood pressure, receiving medication regularly is essential. This is one more reason for these people, often with limited mobility, to subscribe to Amazon ...

The new online pharmacy is committed to delivering its orders in discreet packages to protect the privacy of its customers. Amazon Pharmacy also promises not to use confidential disease data of its customers, to sell them other products or to advertise them, unless it obtains their express consent.

The pharmacy remains a separate service
Amazon's reputation for reliability and the quality of its service are exemplary. The relationship of trust that the Seattle-based company has established with its customers over the past 26 years is an important asset in this new business: the online pharmacist is not allowed to make mistakes, neither on the type of medication delivered, nor on its dose. Note that Amazon Pharmacy will not offer opiates and dangerous or addictive substances (Schedule II substances) such as morphine. The scandal of excessive opiate prescriptions continues to shake the world of pharmacy.

Amazon thought a lot about it before launching Amazon Pharmacy. The head of the activity, TJ Parker, is none other than the co-founder and boss of PillPack, a company which continues to offer a separate service to chronic, more seriously ill patients requiring multiple medications, specifies: " The information and the experience that we have within Amazon Pharmacy will be separate and distinct from that which we know with "specifies this expert who bears the title of Vice-President of Amazon Pharmacy.

The approach duly tested is to be compared with that of drugstore customers: most of these department stores sell ordinary products, ranging from detergent, to chocolate, including dentifice, used oil and diapers - panties. The salespeople and cashiers in these departments are ordinary people, like you find in other supermarkets. On the other hand, in the purely "pharmacy" part of the store, on the shelves and especially behind the counter with protected access, employees, including qualified pharmacists, are in white coats.

Drugstores and supermarkets aren't the only ones targeted by Amazon Pharmacy. There are already online pharmacies: they are usually the extension of commercial brands or well-established insurers like CVS, Cigna or UnitedHealth.

Amazon's offensive comes at an ideal time in the profession. All drugstores, but also medical services and insurance networks, such as Kaiser Permanente, which run large pharmacies, have for months encouraged their millions of customers not to come in person to pick up their drugs. The prevention of the contagion of covid 19 promotes mail order sales. Traditional distributors want to protect the health of their employees and customers by prioritizing as much as possible the processing of prescriptions on the Internet or by telephone and the sending of prescriptions by mail or by special delivery service. This is one more example of Amazon's adaptation to the new mode of consumption imposed by the pandemic.

Go to Top