It will be easy for Amazon to enter pharmaceutical distribution in the US, one medicines supply expert says
As Australian media reveal the first pictures of Amazon’s local distribution centre in Dandenong, drug supply chain expert Stephen Buck has taken a look at Amazon’s plans for the pharmacy sector in the US.
While mail order pharmacies only fill one out of every 10 US prescriptions, the sector is “primed for disruption,” Mr Buck says – beginning with home delivery.
Amazon has now reportedly obtained wholesale pharmacy licenses in Nevada, Arizona, North Dakota, Louisiana, Alabama, New Jersey, Michigan, Connecticut, Idaho, New Hampshire, Oregon and Tennessee. An application is pending in the state of Maine.
But Mr Buck says these acquisitions aren’t a clear indication that Amazon is set to enter pharmacy or pharmaceutical distribution just yet.
“The licenses Amazon applied for happen to cover the distribution of medical-surgical equipment, devices, and other healthcare related equipment, a business they are in today,” he writes for CNBC News.
“The confusion results from the fact that states lump many types of distributors together in the same databases, using the same licensing forms.
“What many of the ensuing media reports failed to mention is that becoming a pharmaceutical distributor or pharmacy entails additional licensure at both the state and national level.”
Because it would need to gain further accreditation as a Verified Accredited Wholesale Distributor by the National Association of Boards of Pharmacy, it’s not currently eligible to distribute or dispense prescription drugs in any US state.
However Mr Buck cautions that it would be “not very hard at all” for Amazon to gain such accreditation.
“Getting state licenses could take a matter of months, and not years. A budget of a few hundred million would accomplish this job, a small portion of Amazon’s $16 billion annual R&D budget.”
Amazon could also start distributing pharmaceuticals to its Whole Foods pharmacies alongside a mail order pharmacy service, he says. Amazon announced that it would acquire the Whole Foods Market supermarket chain in June, and the acquisition has now been finalised.
“This would enable Amazon to control their own supply chain. Perhaps they would manufacture their own generic medications like many wholesalers do.
“Brand drug manufacturers might welcome Amazon, at least initially, as an additional channel to reach consumers.
“Most importantly, could Amazon transform the retail pharmacy and mail experience with a combination of self-service kiosks, lockers, delivery services, and even drones?
“Something tells me that something big is going to happen in pharmacy—and soon.”
Specialty Pharmacy Times reported that the news Amazon had purchased the 12 state pharmacy licences had been followed by a jump in share price of 13%.
Stocks of existing pharmacy groups and related organisations dropped, it says, with Rite Aid shares dipping 5.6% and CVS Health shares by 4.8%.
Meanwhile, Channel 9 has released images of Amazon’s local fulfilment centre, where signs appeared out the front saying, “Welcome Amazonians! It’s still day one! Are you ready to make a difference?”
Amazon is yet to announce its launch date, though Nine suggests that the date may be timed to take advantage of Cyber Monday, the US’ online sales event. The offer cannot include pharmaceuticals due to current ownership regulations.
A spokesperson for the Pharmacy Guild told the AJP last month that the US is “a vastly different market to the Australian market, where we have a Pharmaceutical Benefits Scheme, a highly subsidised medicines scheme which the government’s had in place since about 1948”.
“It’s very difficult to see Amazon—an online provider—really competing with the 5700 bricks-and-mortar pharmacies in Australia that provide not just a medicine, but the advice and professional service that goes along with it.”