Amazon Blows Up Pharmacy Market By Offering Prescription Refills And Efficient Delivery

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Written by Dana Sanchez
Amazon pharmacy
Amazon Blows Up Pharmacy Market By Offering Prescription Refills And Efficient Delivery. Image: Unsplash

Amazon has muscled its way into the online prescription drug market, shaking up another industry with an online pharmacy that sent shares of big-chain competitors CVS, Walgreens and Rite Aid down by almost 10 percent or more on Tuesday.

Customers in 45 states can order medications or prescription refills online for inhalers, creams, pills and meds that have to be refrigerated like insulin and have them delivered to their front door within days.

Prime members will get perks including two-day delivery and discounts up to 80 percent on generic drugs and 40 percent on brand-name meds when paying without insurance, the company said in a press release.

Shoppers have to set up a profile on Amazon’s website and have their doctors send prescriptions there. Most insurance is accepted. The company said it won’t ship Schedule II controlled medications that can be abused including many opioids.

News of the Amazon online pharmacy launch on Tuesday pushed Dow Jones Industrial Average member Walgreens Boots Alliance down 9.6 percent. CVS Health shares lost 8.6 percent. Shares of Rite Aid fell 16.3 percent and GoodRx stock declined 22.5 percent, CNBC reported.

Amazon has had its eye on the health care industry for years, Associated Press reported. In 2018, it paid $750 million to buy online pharmacy PillPack, which organizes medication in packets by time and date that they need to be taken. PillPack has a pharmaceutical license in 50 states, making it a springboard for Amazon to establish a footprint. On the ground, Whole Foods will be able to set up in-store pharmacies to complement PillPack’s online business.

In June 2019, Amazon launched a brand of over-the-counter medications, and in August it launched a health-monitoring wristband called Halo, Business Insider reported. In October 2019, Amazon announced an agreement to acquire Health Navigator, a healthcare startup that offers API tools for the medical sector.

CVS and Walgreens, which own thousands of brick-and-mortar drugstores around the U.S., have been trying to compete with online shopping by offering same-day delivery. Walgreens has experimented with drones that can deliver within minutes after being ordered. CVS started testing prescription deliveries with self-driving vehicles, AP reported.

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Amazon’s major retail competitors — Target, Costco and Wal-Mart — have all added in-store pharmacies.

Amazon’s foray into the healthcare industry is causing a seismic shift in the world of the drug prescription and supply chain, Healthcare Weekly reported. “With the purchase of PillPack, Amazon not only set its eyes firmly on the retail pharmacy business, but it’s also slowly including branding.”

The U.S. pharmacy market alone is worth $312.6 billion, up 3 percent from 2018. Pharmacy stocks have underperformed the broader market in 2020, CNBC reported. The online pharmacy business is driving rapid market growth almost exclusively, according to Zion Market Research.

The existing U.S. pharmacy supply chain “is replete with middlemen, highly convoluted, and jam-packed with unnecessarily complex business models,” Healthcare Weekly reported. “The e-commerce giant has the technology, ethos and framework to streamline the entire pharmaceutical supply chain and rally the overall experience for the drug makers, insurance companies and patients.”