Will Amazon Pharmacy Disrupt the Market?

Amazon has mastered shipping and delivery, which is an important factor in the pharmacy sector.

Amazon is one of the largest retailers around the world and has conquered numerous markets over the years, including fashion, corporate computing, and even original TV programming. Now, it seems poised to make waves in the pharmacy industry with its very own Amazon Pharmacy.

Granted, the Amazon Pharmacy is not yet in place; you won’t find it anywhere on the Amazon website if you browse through its pages today. However, it won’t be surprising to see this business venture from Jeff Bezos’ company in the coming years. The pharmacy industry earns billions of dollars each year, and it would be uncharacteristic of Amazon to not at least try to grab a share of the market.

READY FOR PHARMACY?

Many industry experts believe that Amazon Pharmacy is ripe for picking. The retail giant already has the right infrastructure in place: it has mastered shipping and delivery techniques and can now get products to the customer’s doorstep in 24 hours and even less. As a result, customers won’t have to worry that their prescriptions will arrive late, and they’ll have more confidence in buying their medications from Amazon.

The retail company also has around 80 million subscribers to its Amazon Prime service as of April 2017, as estimated by Consumer Intelligence Research Partners. With this number of subscribers in place, Amazon won’t have to look hard to find customers who would be interested in its online pharmacy services.

Considering that Prime provides free two-day shipping to its members, it is even possible that more people will buy a membership to take advantage of zero shipping costs when buying medications online.

If the retail giant decides to make Amazon Pharmacy a reality, it can use many other tricks to increase its market share. According to Angela Mattie, who heads the health care management department of Connecticut’s Quinnipiac University School of Business, Amazon has the clout to acquire a small pharmaceutical company. It can also build partnerships with large companies to act as their pharmacy benefit manager (PBM) and provide pharmacy services to the companies’ employees.

PROS AND CONS OF AN AMAZON-LED PHARMACY

All of these factors show that Amazon does have the potential to disrupt the pharmacy industry. But the question here is: do you really want to make Amazon Pharmacy a reality?

To answer this, let’s take a closer look at the benefits and drawbacks that this service would bring.

PROS

Reduce medication costs

Amazon is in the business of offering high-quality products—or at least decent products—at affordable prices. If the company can do the same thing for OTC medications and prescription drugs, it can be a big help to low-income individuals who are struggling to manage their health and still put food on the table.

Provide easy access to medications

Older people, as well as those with physical limitations and disabilities, find it hard to get out of the house and visit their local pharmacy, which is why many of them opt for mail-order pharmacy services. If Amazon Pharmacy enters the market, these customers will have more options in terms of buying their prescriptions and having them delivered to their doorstep.

Disrupt PBMs

Some PBMs have been accused of overcharging both customers and their partner pharmacies, and refusing to pass on the savings that they get from drug manufacturers. Amazon has the potential to disrupt the business of PBMs and even force them to change their practices in order to stay competitive.

CONS

Discourage patients from consulting local pharmacists

Once Amazon enters the pharmacy industry and brings with it lower prices, customers will have to choose between having face-to-face consultations with their local pharmacists and saving money. Most often, those who have tight budgets will opt for the latter.

This can have several negative consequences, however. Without the guidance and monitoring of professional pharmacists, patients might not take their medications at the correct dosage for the correct length of time. This can lead to overdoses, antibiotic resistance, and other health problems, which, in turn, can result in unnecessary hospitalizations and higher healthcare costs.

Create negative environmental consequences

In an article on CNBC.com, C. Michael White points out that retailing drugs can lead to lots of waste. Unlike other goods, medications cannot be returned to the manufacturer or retailer and then resold to another customer since there’s no way to determine for sure whether the drugs have been tampered with. Therefore, companies have no choice but to dispose of the unused medications.

The problem here is that many drugs end up being improperly disposed, eg, flushed down toilets or thrown in landfills. This can end up damaging marine life and even contaminate the water supply, which can lead to further health problems as people get exposed to antibiotics in the water they drink and develop antibiotic resistance.

WARNING SIGNS

As you can see from above, Amazon Pharmacy will bring both advantages and disadvantages to the pharmacy industry, and even other sectors. Still, whether you like it or not, there’s nothing anyone can do if Amazon indeed decides to offer its own pharmacy services.

In fact, there are signs that it’s getting ready to do just that. In Seattle, Amazon now delivers non-prescription medications from Bartell Drugs and promises a one-hour delivery service. In Japan, the retail giant has started to sell category 1 medications, ie, those that require pharmacist consultation before they can be dispensed.

The company also hired Mark Lyons in the early part of 2017. Lyons previously worked with Premera Blue Cross, a health plan provider in the state of Washington. He’s now reportedly an internal PBM for Amazon’s employees.

The retail company is also advertising that they need a primary home care licensing program manager, which further proves that Amazon is indeed planning to enter the pharmacy sector.

It’s important to note that it won’t be easy for Amazon to do so. First of all, it has to compete with established mail-order drug companies, which already own a large chunk of the market. It also has to hire licensed pharmacists and create a system that would confirm that the person prescribing the drug has the legal authority to do so.

Still, despite these challenges, it’s easy to see Amazon overcoming these hurdles to and disrupt the pharmacy market in the future.

Joshua Pirestani is the President and founder of the American Pharmacy Purchasing Alliance.