Amazon Pharmacy has launched in the US, offering Prime customers discounts on prescription medications and unlimited, free delivery – and it could be coming to Australia soon
Amazon.com announced the launch of its new store, Amazon Pharmacy, on Tuesday.
Its new offering allows US customers to complete an entire pharmacy transaction on their desktop or mobile device through the Amazon app.
Customers will be able to ask their prescriber to send new or existing prescriptions directly to Amazon Pharmacy for fulfilment.
Using a secure pharmacy profile, customers can add their insurance information, manage prescriptions, and choose payment options before checking out. Orders are then delivered in discreet packaging to the customer’s preferred address.
Those who have a Prime membership will receive unlimited, free two-day delivery on orders from Amazon Pharmacy.
“As more and more people look to complete everyday errands from home, pharmacy is an important and needed addition to the Amazon online store,” said Doug Herrington, Senior Vice President of North American Consumer at Amazon.
“We’re expanding our pharmacy offering to Amazon.com, which will help more customers save time, save money, simplify their lives, and feel healthier.”
Shares in US drug store chains Walgreens, Rite Aid and CVS dipped significantly on the news.
The announcement comes more than two years after Amazon acquired PillPack, which delivers medications in pre-sorted dose packaging, coordinates refills and renewals.
PillPack by Amazon Pharmacy will remain a distinct service for people managing multiple daily medications for chronic conditions, said the company.
In 2018, Amazon also launched a line of OTC drugs with private-label manufacturer Perrigo. The Basic Care range includes products such as ibuprofen, acetaminophen, antihistamines and more.
With its prescription drug offering, the company has partnered with insurers so that most purchases will be covered by insurance, based on the US system.
However Prime members are also being offered savings on medications, which will reportedly save members up to 80% off generic and 40% off brand name medications when paying without insurance.
“It’s very interesting what Amazon is doing, obviously capitalising on the virus crisis – people preferring to stay at home and order online and have things delivered,” Bruce Annabel, Consultant at Pitcher Pharmacy Services based in Brisbane, told AJP.
“It is a very, very good offer made at the right time, and they deal with the insurers which makes it more difficult for the current providers to hold the patient.
“Amazon run a very lean overhead structure, so they don’t pay overheads that Walgreen or CVS or RiteAid pay, or even for that matter Walmart and CostCo. These [companies] still have to pay for premises and so on, whereas running an online operation is cheaper,” he said.
“I think it’s going to have quite an effect in the US, on all of those other providers,” said Mr Annabel.
Robert Read, CEO of e-medication management company MedAdvisor, told AJP: “It’s a venture we’ve known was coming and it’s going to shake up the pharmacy sector – especially for those who haven’t thought about how to build a loyal, digitally connected patient base”.
Mr Read said that in addition to offering cheaper drug prices, “the impact of home delivery at scale leveraging Amazon Prime will be yet another aspect retail pharmacy will need to contend with in the US”.
Amazon trademarked the term “Amazon Pharmacy” in Australia early this year, signalling plans for the e-commerce giant to one day enter the pharmacy market here.
Amazon.com.au launched in Australia in December 2017, while its Prime offering rolled out in mid 2018.
“In Australia, the risk is the same as we see a shift to online models, away from bricks and mortar pharmacy,” said Mr Read.
A well organised and experienced Amazon could be a real threat here for pharmacies that have not offered their customers and patients the convenience of online ordering and home delivery.
Mr Annabel said the US scenario is quite different compared with Australia “because we have a highly centralised drug reimbursement system, which is obviously the PBS and the safety net scripts.
“They’re not going to have the same price advantages, certainly not on PBS drugs because you can’t discount those … which will be significant reason why they wouldn’t get the same traction as I think they’ll get in America. But they could have quite an effect here, particularly on the online providers,” he told AJP.
“Pharmacies ‘down under’ also need to consider carefully the virus impact on customer behaviour and how they should respond. There is potential for those pharmacies that don’t respond for differences to open up between what they do versus what customers want.
“If that occurs, those pharmacies will lose relevance and experience loss of patient visits and sales.”
He added that Amazon’s PillPack offering could have application in Australia, however to do so they would need to create an alliance with a registered pharmacist who owns a Section 90 pharmacy.
The Pharmacy Guild of Australia declined to comment on the news, however it has previously said that “the Australian regulatory environment for prescription medicine supply may be an impediment to Amazon”.
“Furthermore, the Pharmaceutical Benefits Scheme significantly subsidies many prescription medicines, including all PBS medicines dispensed to concession cardholders – so it is unlikely Amazon could supply medicines at a cheaper price,” the Guild spokesperson said.
Amazon is a digital behemoth, considered one of the Big Five companies in the US information technology industry along with Google, Apple, Microsoft and Facebook.
In August this year, Amazon CEO Jeff Bezos became the first person to ever be worth $200 billion, according to Forbes.