Amazon Disrupts Industry After Obtaining Wholesale Pharmacy Licenses
Pharmacy wholesaler stocks dropped significantly due to concerns over retail giant Amazon entering the pharmacy space.
In June 2017, Amazon sent shockwaves through the industry due to speculation that it may be preparing to enter the pharmacy space, which peaked after the acquisition of Whole Foods. Last week, there were reports that the online retailer has obtained pharmacy licenses in 12 states, according to the St. Louis Post-Dispatch.
While Amazon told the Post-Dispatch that it would not respond to speculation, a records review showed that it has received wholesale pharmacy licenses in Nevada, Arizona, North Dakota, Louisiana, Alabama, New Jersey, Michigan, Connecticut, Idaho, New Hampshire, Oregon, and Tennessee, with a pending application in Maine.
Amazon’s license in North Dakota also suggests that it may be allowed to distribute medical equipment and medical gas, according to the article.
However, an attorney told the Post-Dispatch that the licenses do not permit Amazon to start fulfilling prescriptions and that they still need a pharmacy license, according to the article.
The news of Amazon obtaining pharmacy wholesaler licenses quickly caused waves in the pharmacy industry. Amazon’s shares increased by more than 13%, while pharmacy wholesalers were not as lucky.
Market Insider reported that shares of pharmacies and related entities dropped significantly:
- Rite Aid’s shares dropped 5.6%
- CVS Health’s shares dropped 4.8%
- Express Scripts’ dropped 3.5%
- McKesson’s shares dropped 3.4%
- AmerisourceBergen’s shares dropped 4.4%
- Walgreens Boots Alliance’s shares dropped 3.7%
- Cardinal Health’s shares dropped 2.5%
With more than 80 million subscribers to its Prime service as of April 2017, Amazon will have a relatively easy time finding new customers interested in its online pharmacy services, according to the American Pharmacy Purchasing Alliance (APPA).
The APPA highlights several benefits of an Amazon pharmacy, including potentially lower drug costs, increasing access to drugs, and disrupting current pharmacy benefit managers. An Amazon pharmacy could result in patients not using brick-and-mortar pharmacies and could result in medication waste, according to the APPA.
The potential of Amazon to enter the pharmacy industry not only affects retail chains but may also have serious implications for specialty pharmacies and the patients they treat.
An article published by Specialty Pharmacy Times highlighted the lack of digital support that specialty pharmacies currently offer, an area in which Amazon is known to excel. When matched with Amazon’s experience running call centers, these factors may threaten the typical specialty pharmacy operation.
“By disrupting the current limited-scale high-touch model with an infinitely scalable smart-touch technology-dependent model, Amazon could leverage remote-monitoring devices, artificial intelligence-powered conversational user interfaces, behavior-based real-time virtual coaching, and a low-cost optimized call center to deliver personalized and holistic daily engagement at any point during the patient’s clinical journey at an extremely low price point,” Ron Lanton, III, ESQ, True North Political Solutions, and Victor Morrison, Next IT Healthcare wrote in SPT.