The headwinds for retail pharmacy continue to grow as new technology and services are poised to disrupt the dispensing of pharmaceuticals; and COVID-19 is accelerating the developments.

 

Evolution of Pharmacy

In just the past year, there have been various major developments that each challenge the business of retail pharmacy.

 

Amazon

The much-anticipated Amazon Pharmacy has finally arrived. Amazon officially launched a new online pharmacy service on Tuesday, servicing cash and insurance customers in 45 states. Currently, Amazon Pharmacy is not serving Hawaii, Illinois, Kentucky, Louisiana, or Minnesota. Amazon Pharmacy is likely to fit nicely with Amazon’s other healthcare ambitions including providing their own healthcare in Seattle and PillPack’s medication adherence dispensing.

Pharmacy Delivery Startups

The expansion of telehealth has allowed tech-savvy companies like Keeps and Ro to market and sell prescription drugs directly to consumers. Millions of patients have opted to skip insurance, PBMs, and traditional pharmacy due to the ease of getting care through pharmacy startups.

Retailer Partners

Initially just focusing on restaurant deliveries, last-mile delivery services have expanded its services to retailers – and now pharmacies. Sam’s Club officially entered a partnership with DoorDash to have the company deliver prescriptions for over 500 Sam’s Club pharmacies. Instacart provides the same “last-mile” delivery services for Costco for stores across the nation.

Drone Delivery

We reported exactly a year ago that CVS and Walgreens had begun testing drone deliveries of various items, including OTC drugs (read here). Now, a major pharmaceutical manufacturer, Merck, has teamed up directly with Volansi, an on-demand aerial delivery service for time-critical shipments. Volansi is now delivering cold chain medicines directly to a medical center from Merck’s manufacturing site.

Discount Cards: GoodRx and now Amazon

Discount cards are a unique play – if a discount card pharmacy network is small, it can be a huge benefit to pharmacies because they can bring the additional volume. However, if a discount card’s pharmacy network is total, then it is a clear negative – pharmacies have to pay a fee for the privilege of filling a prescription that they would have filled in the first place. Amazon’s new discount card stands to proliferate the use of discount cards (like GoodRx) even further, which will immediately reduce the profitability of retail pharmacy.