- Amazon launched Amazon Pharmacy, a delivery service for prescription medications.
- The service allows customers to purchase prescription medications with or without insurance.
- It boasts that Amazon Prime members can save up to “80 percent off generic and 40 percent off brand name medications when paying without insurance.”
- Experts say Amazon Pharmacy has the potential to improve drug pricing in the United States, but it likely won’t be a game-changer since it will work within the same system as other online pharmacies.
- Despite its boasting, Amazon Pharmacy pricing doesn’t really offer much of a discount.
Amazon’s blue delivery vans have quickly become ubiquitous around the nation, delivering everything to people’s doors, from essential daily items to live insects.
Now, the world’s largest online retailer run by the world’s richest man is getting even further into the U.S. healthcare market by offering to send prescription drugs to its customers’ doors.
In announcing the new venture on Nov. 17, Amazon said in a statement that customers can purchase prescription medications with or without insurance.
It boasts savings for its 100 million Prime members of up to “80 percent off generic and 40 percent off brand name medications when paying without insurance.”
That membership also includes unlimited, free 2-day delivery.
“We designed Amazon Pharmacy to put customers first — bringing Amazon’s customer obsession to an industry that can be inconvenient and confusing,” TJ Parker, vice president of Amazon Pharmacy, said in a statement.
On the site, Amazon users can compare the cost of drugs to see what’s covered by their insurance, while also giving the option of paying entirely out of pocket — sometimes the cheaper route, especially if coupons are available from the drug’s manufacturer.
Amazon does say it won’t be delivering any drugs listed under the Drug Enforcement Administration’s Schedule II controlled substances, which includes opioid pain meds.
It also only sells 30-day supplies, while other online pharmacies allow for 90-day supplies.
But outside Amazon’s own distribution structure and size as a company, many familiar with the way Americans get their prescription drugs say it has the potential to create meaningful contributions to lowering drug costs.
But, so far, it’s essentially another mail-order prescription drug delivery service and not tackling larger issues in the United States’ notoriously high-priced drug market.
“Drug pricing is one of the most secret prices of them all in America. Just because Amazon has it, it doesn’t mean it’s going to be the best price or best for you,” he said.
Pharmacy isn’t Amazon’s first venture into prescription medications.
Amazon bought PillPack in 2018. That service is aimed at helping people manage their chronic conditions by receiving their multiple medications in presorted packages delivered directly to their doors.
Even then, as CNBC reported, pharmacy benefit managers (PBMs) — the middlemen between patients and insurance companies — were worried about Amazon entering the prescription drug market “because it’s really the only company that could conceivably break up their control if it were to jump into the distribution market and pressure drug manufacturers to lower prices.”
While lowering drug prices is often a bipartisan campaign promise, spending on prescription medications in the United States continues to grow.
According to a 2019 report by the IQVIA Institute, which tracks spending on medications, net medication spending in the United States will increase from $344 billion in 2018 to $420 billion in 2023.
But those familiar with the prescription drug market say Amazon won’t be a gigantic game-changer in what people pay for their prescription medications.
Levin said Amazon is merely “putting a Band-Aid on the enormous problem of prescription drug pricing” and will only “feed the beast and contribute to the drug pricing problem in this country rather than disrupting it.”
“While consumers will enjoy lower prices on their drugs, the discounts are still paid for by the same PBMs responsible for the exorbitant cost of drugs to begin with,” Levin said. “Ultimately, this service won’t do anything to reduce costs in our broken healthcare system.”
Part of that broken system is the public’s ability to fully understand all the forces behind what goes into drug pricing.
That’s due in part because PBMs, whose prices they negotiate for things like private insurance plans and Medicare Part D, aren’t transparent in what the true cost is for the drugs they buy for these plans.
They’re also highly criticized for needlessly increasing the price of those prescription medications.
“They make it harder to understand,” Levin said.
And since Amazon is using the PBM model, many skeptics argue it’s not bringing much new to the game in terms of revolutionizing the way people — whether they have insurance or not — get their prescription medications.
Jason Reed, PharmD, of BestRxforSavings.com, who used to work for a major PBM, said because the prescription drug space is “a tangled web of deals between companies that don’t always have the patient’s best interest at heart,” it will take Amazon some time to crack into that space.
“Until they get in PBM networks, they will not gain major market share,” Reed said. “Amazon will be able to make change in this space. It will require partnerships with existing players and taking some of the complexity out of the system, most likely with advanced technology, but don’t expect anything big for the next plan year.”
Wendell Potter is a former corporate public relations executive turned reform advocate and New York Times’ bestselling author. He said he’s skeptical of Amazon entering the pharmacy market because it doesn’t appear to enact any meaningful change at the real causes of why prescription drugs are so expensive.
But, he said, with its size and preexisting distribution infrastructure, Amazon could get away from the PBM model and bring down the costs of healthcare.
“If Amazon could dismantle the middleman, that would be significant,” Potter said.
So far, there aren’t many signs that will be happening.
But what has been happening at Amazon has drawn concern, especially those wondering whether Amazon is a company to give even more money to.
According to Reveal from The Center for Investigative Reporting, Amazon officials have misled the public and lawmakers about its record on worker safety as employees are dogged to meet deadlines to get packages out the door as fast as possible.
That includes injury rates that have gone up each of the past 4 years at a rate nearly double the most recent industry standard.
Adding prescription medications to Amazon’s growing rate of available products meant to be shipped out to people within a 2-day window isn’t expected to slow that rate down.
Phil Baker, PharmD, is a pharmacist who founded the membership-based Good Shepherd Pharmacy, which serves uninsured and underinsured patients in Memphis, Tennessee. He said he couldn’t be more disappointed in Amazon’s model.
“I’d hoped that Amazon would enter the pharmacy space with disruptive payment models and economies of scale which would make prescriptions more affordable for uninsured Americans, but also, give employers an alternative to the PBM model,” Baker wrote on LinkedIn. “Instead they’ve chosen a model, centered on PBM reimbursement, which perpetuates the status quo.”
Baker posted prices of some of the most commonly prescribed prescription medications, including name brands and generics, and found that Amazon’s prices don’t offer that much of a discount.
For example, 30 doses of 20 milligrams (mg) of the cholesterol-lowering drug atorvastatin — the generic for Lipitor — goes for $14.90 on Amazon without insurance, plus the $12.99 monthly Prime membership.
At Kroger the membership is $3 a month. The same dose and quantity of atorvastatin is $6.
Baker said that the difference between Amazon’s cash prices and membership price “smack of spread pricing.”
According to the Centers for Medicare & Medicaid Services, spread pricing is when PBMs keep some of the money paid to them by the health plans for prescription drugs instead of passing on the full payments to pharmacies.
Another common cholesterol drug is the brand name Crestor. PharmacyChecker.com, which compares prices for U.S., Canadian, and international online pharmacies, lists its cheapest option at $0.40 for a 10-mg tab while Amazon’s cash price goes for $7.74 a tab.
Mark Campbell, PharmD, the vice president of clinical solutions at RxBenefits, said there are two types of people who take prescription medications: those with insurance and those without.
For those without insurance, Amazon having its own pharmacy and delivery network is a new concept, which may benefit those who pay for their medication entirely out of their own pockets.
“For many consumers who pay cash, they will see this as advantageous,” he said.
Then there’s the issue of customer service, i.e., a pharmacist.
Amazon says it’ll have pharmacists available 24/7, but it’s unlikely to replace people’s local pharmacist, who they may have been going to for years, especially for compounded medications, which Amazon currently doesn’t offer.
“If you have that connection, you’ll still find it has that value,” Campbell said. “Amazon is more about delivery and price. When Amazon does something, it’s purposeful.”
So far, that’s creating its own pharmacy and using its own preexisting distribution network to potentially offer some competition in the mail-order prescription drug market and doesn’t currently appear to be much else.
“Where they go from here,” Campbell said, “we don’t know.”