Let’s talk about Amazon Pharmacy, and whether all the fuss is actually warranted or not.

First thing to know is they are actually launching 2 programs simultaneously: 1) mail-order Pharmacy; and 2) discount card program like GoodRx.

1/

The mail pharmacy will accept insurance / PBM networks, with free delivery for Prime members.

The discount drug program negotiates prices via Inside Rx savings program from Evernorth (Express Scripts / Cigna).

2/

Drugs will be for things like birth control and blood pressure.

They will not deliver Schedule II controlled medications (i.e., opioids).

This would concern me if you’re a DTC Pharmacy selling a specific generic drug on the list.

3/

This move will affect traditional pharmacies in 2 ways:

1) Amazon’s Prime discount card business (like GoodRx), requires pharmacies to pay a fee for dispensing.

2) Amazon has the potential to increase mail-order dispensing, which reduces in-store volume.

4/

However...

They still have to play ball with PBMs for mail-order.

The still receive their drugs via GPO, AmerisourceBergen.

The margins are low for mail.

GoodRx works with more PBMs (potentially lower prices).

And if they launch a PBM, the incumbents will retaliate.

/end