What Amazon’s PillPack Acquisition Means for Your Pharmacy

July 6, 2018
Christine Blank, Contributing Editor

Amazon's acquiring of PillPack made headlines, but it might not make as many ripples as you would think.

While Amazon’s acquisition of PillPack is of concern to brick-and-mortar pharmacies, it also provides an opportunity for them, experts say.

Amazon acquired PillPack, which delivers medications in pre-sorted dose packaging and coordinates refills and renewals, for a reported $1 billion. The news shook pharmacy stocks hard. CVS Health, Walgreens Boots Alliance, and Rite Aid collectively lost more than $11 billion in stock market value the day the news was announced, says Adam J. Fein, PhD, president of Drug Channels Institute.

However, the merger is simply a “small first step that will let Amazon begin growing a pharmacy dispensing business,” Fein writes in Drug Channels. “We are still a long, long way from a fundamental restructuring of the complex U.S. drug channel. The incumbents still have opportunities to defend their position, capture value from internet technologies, and streamline distribution. However, the prospects of a retail pharmacy shakeout over the next 10 years have just increased.”

However, some experts believe the impact on brick-and-mortar retailers could be significant. “Retailers are scrambling to retain foot traffic and Amazon’s entry into the pharmacy market is another major disruption,” Linda Pinney, founder and CEO of Asteres, which markets the ScriptCenter automated prescription dispensing machines. “The pharmacy customer is one of the most valuable shoppers in the store, so it is imperative that their experience is convenient - at a time when long lines and limited pharmacy hours are the most common complaints.”

Amazon offers same-day delivery in many cities, so customers could quickly get their PillPack medications -which is a major competitive advantage over many drug store chains, Arielle Trzcinski, senior analyst at Forrester who covers health care and technology, tells CNN. "I could come home from the hospital or doctor's office and my prescription is already waiting for me," Trzcinski tells CNN.

While CVS recently said it will start offering next-day delivery of scripts for $4.99, it is “too little too late," Trzcinski says. "They're going to charge people per delivery.”

Amazon’s PillPack acquisition is not being taken lightly by independent pharmacies. “Anytime Amazon makes a move in the pharmacy space, it bears trying to figure out where they are headed. One look at the ripple effect the PillPack acquisition announcement had on pharmacy stocks on Wall Street last week makes that clear,” says B. Douglas Hoey, RPh, CEO of NCPA.

However, Amazon’s move into the prescription adherence/delivery space provides an opportunity for independent drug stores, according to Hoey.

“Independent pharmacies have been providing adherence packaging for many decades, so where’s the innovation? Amazon is buying a mail-order pharmacy that does adherence packaging–a move unlikely to give them access to the high-cost biologics market, which are sold largely through PBM-run specialty pharmacies,” Hoey says. “Seems to me, Amazon’s announcement is an opportunity for independent pharmacies to tout two important services they have offered for decades, but may not have promoted–adherence packaging and same-day home delivery services.”

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