How will independent community pharmacies fare with Amazon’s encroachment into the pharmacy space?
Online retail giant Amazon today launched Amazon Pharmacy, a new online store offering prescription delivery to customers.1
The addition of medications to Amazon’s increasingly far-reaching product list started with PillPack, a service the company initiated in 2018 for customers with chronic conditions who require multiple daily medications. PillPack is now a part of Amazon Pharmacy.1,2
Customers who are members of the loyalty club Prime will receive 2-day free shipping on their medications, as well as discounts on generic drugs up to 80% off and up to 40% off brand-name drugs.2
Amazon Pharmacy customers will have to create a pharmacy profile, complete with their insurance information, where they can manage their prescriptions and decide whether to pay their co-pay or a non-insurance price, the latter of which is linked to the heavily discounted rates for Prime members.1
Amazon’s plunge into pharmaceuticals has already affected industry competitors; the stocks of CVS, Walgreens, and Rite Aid fell between 8% and 15% today, the Associated Press and Reuters both reported.1,2,3
Although the news has seemingly disrupted large retail chain pharmacies, Amazon’s online pharmacy store may usher in necessary changes to the pharmacy landscape.
David Pope, PharmD, CDE, chief innovation officer of OmniSYS, who is also a Drug Topics® editorial advisory board member, said that Amazon’s recent move into the space highlights the shifting business model within pharmacy.
“It’s further evidence that the community pharmacy is shifting to higher value clinical services,” Pope said. “And community pharmacy has already begun the process of shifting, not necessarily away from prescriptive process, but providing new value-added services that separate them as destinations of care, and not simply as the provider and dispensary of medication.”
Amazon’s online pharmacy presence also reveals the reality of drug pricing in the way of usual and customary prices, as customers can access lower prices without their insurance with Amazon Pharmacy.
“I think one narrative that’s really interesting here is that of drug pricing,” Pope told Drug Topics®. “The expansion of discount cards has exposed the fallacy of customary prices, so what the response from pharmacy should be in all of this is reassessing what usual and customary pricing really means; how they view their cash business and where their margins can truly be impacted. In most cases, it is going to result in more aggressive cash pricing for these pharmacies, and that in turn will challenge this necessity for drug discount cards,” Pope said.
Considering the widespread uptick in home delivery amid the coronavirus disease 2019 (COVID-19) pandemic, Amazon’s online store may launch medication delivery to new heights. Pope explained that independent community pharmacies have been in the space of online refills for a long time and continue to have a presence online. Although Amazon Pharmacy is new competition, its ultimate impact on pharmacy is unclear.
“Will this negatively affect independent community pharmacy? I think it’s too early to tell,” Pope said. “I’m a former independent pharmacist myself. Whenever I think about this, I think about the resilience of the independent pharmacy, the ability to adapt to the existing landscape and ever-changing conditions that has never swayed.”
“Independent community pharmacy has this unique ability to be able to attach not just medication delivery but also personal clinical care,” Pope said. He explained that community pharmacies are also providing COVID-19 testing across the country and many are planning on offering COVID-19 vaccines once available.
“These are things that Amazon can’t do, so the future is still bright for every sector of pharmacy, that’s for sure,” he added.