Originally published on Sep 14, 2017.
Amazon is in a position to upend the pharmaceutical supply chain; from government contracts to supplying independent pharmacies across the United States.
Amazon May Start it’s Own PBM
Amazon hired Mark Lyons, a 20 year veteran of the health care industry whose experience spans from pharmacy benefit management to health insurance. Interestingly, Amazon recruited Mr. Lyons from their current health insurance provider, Premera Blue Cross (goo.gl/nyxJgS). Now, it is possible that Amazon recruited Mr. Lyons solely to manage their ever ballooning employee base; however, given his expertise in managing pharmacy benefits specifically, it is possible that they build a PBM in-house.
Amazon AWS started in July 2002 to bring Amazon technology to the market. Officially relaunched in 2006, AWS is by far and large the leading cloud computing provider 11 years later. This could parallel Amazon’s potential internal PBM being offered to the American public.
You might recall how Amazon introduced cashier-less checkouts in physical Amazon Go retail stores, where they only let employees shop during the Beta program. Under a similar strategy, Amazon might also use its employees as guinea pigs to fill mail order prescriptions as a Beta program before allowing the American public to upload prescriptions and have them delivered using Amazon’s advanced logistics.
Seven of the top US pharmacies, by revenue, are mail order pharmacies. Another top-player, Walgreens, just recently signed on a joint venture with Prime Therapeutics bringing the total to 8 of the top 15 pharmacies being directly involved with a mail-order pharmacy. Although recent QuintilesIMS data has shown that prescriptions declined in quantity dispensed, the reasons may not be because it is what the public preferred but a hard-fought battle that is being won by incumbents; instead it is arguable that Amazon can make it the new standard. No need to stop by the pharmacy on the way home when it could be conveniently waiting for you at home!
Headhunting in the Pharmacy Automation Space
Of course, Amazon is best known for efficiency, which is a consequence of their automation. According to a presenting company at the recent NACDS show in San Diego, Amazon has been aggressively headhunting software developers and engineers in the pharmacy automation space. With auto-fill robots in strategically located areas, churning out ready to dispense prescription drugs, it is an Amazon dream come true.
Low-Laying Fruit: Individuals with High Deductibles and Cash Payments
Upload your prescription, one-click payment, Amazon pharmacist approves prescription and, potentially, have it delivered two hours later with Amazon Prime Now. Sound pretty good? Now remember that Amazon will be able to eventually muscle their way to the best prices available in the US with their volumes, alongside their already impressive logistics to push down the price further. This service is already available in Japan, as reported by the Japan Times in April (goo.gl/BzWG38).
The potential of Amazon to take over distribution and dispensing of pharmaceuticals presents a threat to the entire supply chain, from manufacturer to provider.
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