Originally published on Feb 19, 2018.
With the retail, technology and logistic juggernaut that is Amazon showing no signs of letting up, many companies are looking at new technologies and partnerships to stay relevant.
How Amazon Will Affect the Independent Pharmacy
Amazon is obsessed with the consumer and the prescription drugs market is very substantial by revenue–a match made in heaven for Amazon. If they are able to leverage their consumer and logistics capabilities, it would be a phenomenal add-on service to their Prime membership. An offer similar to Walmart’s “$4 dollar” generic might be the place to start. The move could immediately target the cash market as opposed to the insurance market, which would be a little more difficult to tackle.
When Amazon Will Make Their Move
This really is a matter of time. Amazon is expanding both horizontally (increasing market share and capabilities) and vertically (with consumer loyalty as their home-base). They committed to the medical device/healthcare setting as early as 2016 through licensing and investment dollars so it is expected it will be done in the next three to five years. With Amazon attacking the healthcare continuum on both sides of the patient, both in distribution and benefit administration, it is inevitable that they work their way to providers.
Supply Chain: Manufacturer > Distributor > Provider/Pharmacy > Patient
Patient Care: Patient > Benefits Administration > Insurance > PBM > Provider/Pharmacy > Patient
Should Independent Pharmacies feed into the new delivery frenzy?
It is foreseeable that the Independent Pharmacy can do one of two things. One, they keep their patients or two, they can increase profitability which is a must and should be focused on daily. Big corporations have been targeting independent pharmacies on these two fronts for decades by either taking patients or reducing reimbursements (lawsuits launched against PBMs being the case and point).
However, to be a meaningful push, I think it has to be a nationwide push that puts the American public on notice–hopefully NCPA and similar organizations might be interested and up for the job. If on a big enough scale, it might be enough to start a real conversation with the traditional carriers (UPS & FedEx), who are also wary of Amazon’s encroachment. Given the idea might not make sense on a course of anti-biotics it is a great idea for maintenance drugs like statins.
The Potential Risk for Independent Pharmacies
Independent pharmacies have to be wary of delivery services using them to scale and then being cut out of the deal when they sell to the highest bidder.
Further, with delivery, you are not getting the eyeballs in store for ancillary purchases. Merchandising would have to adapt accordingly.
Potential Benefits for Independent Pharmacies
Pharmacies should look at whether a recurring monthly charge or a sub-charge creates an additional profit margin. Additionally, a delivery option will create loyalty, both because the patient may feel better taken care of and because it is easier to fill recurring prescriptions.
Also, if executed properly, this is an interesting way for independent pharmacies to not only increase their bottom-lines and patient loyalty but, more importantly, it will also help patient care through medical adherence. Without the requirement of driving to a pharmacy to refill prescriptions, patients will be less likely to abandon or miss their drug regiment.
PillPack, adding retail arm
ScriptDrop, service for retail pharmacies
Phox Health, service for retail pharmacies
GetMyRx, service for retail pharmacies