Amazon Can't Deliver the Covid Vaccine—But It Is Shaping the Future of Healthcare

Healthcare has been top of mind for American consumers throughout 2020, and a new player has just entered the field: online pharmacy services from Amazon. Amazon Pharmacy offers prescriptions with free two-day delivery and a savings benefit for customers paying without insurance. In a statement, TJ Parker, vice president of the service, said it “[brings] Amazon’s customer obsession to an industry that can be inconvenient and confusing.” That means helping customers understand their medication options while offering price transparency and fast delivery. It's a new field and an ambitious move for the ecommerce hub, but it's not the only one shaking up the healthcare field. Pharmacy retailers including CVS, Walgreens and Walmart are driving a ripple effect through the health and retail industries that's bringing some big changes in the coming year and beyond. How Amazon crafted Online Pharmacy 2.0 The introduction of Amazon Pharmacy will “shake up the healthcare infrastructure” by making it more accessible and human, according to Jacqueline Lovelock, managing director of health at R/GA. “Your medical life has for a long time been bifurcated from the rest of your life,” she said. “And suddenly, Amazon moving into that space means I can manage [that] part of my life as I do the rest of it.” Online Grocery Helped Fuel Amazon’s 40% Jump in Sales During ‘Unusual’ Q2 Market research firm Forrester anticipates the prescription-ordering service will be a big draw for consumers who have been ordering groceries online, with research showing nearly 30% of consumers want prescriptions by mail. Until now, it’s been “a really clunky process” from providers like Express Scripts and CVS Caremark, according to Arielle Trzcinski, senior analyst at Forrester. “It can be more cost effective and convenient in the sense that I can order a 90-day supply versus a 30-day supply," she added. "But it's a lot of manual input in terms of data." Amazon, on the other hand, has streamlined the process. With just a first and last name and last four digits of someone's Social Security number, it will be able to "automatically" find insurance information. “What they did is they essentially cherrypicked all of the best things their competitors did and brought them into a single experience," Trzcinski said. Amazon is also offering perks like order tracking, which Trzcinski noted many pharmacy benefit managers (PBMs) and retail pharmacies do not provide. “Visibility across the supply chain will provide greater comfort to consumers who may be fearful of delays or the risk of medications getting lost in the mail,” she added. Meanwhile, Amazon is also bringing transparency to cost. Consumers, Trzcinski said, are not always aware that prescription prices can fluctuate—and even be cheaper—when they are processed outside of their insurance. This, of course, is at least initially bad news for pharmacy retailers like CVS Health and Walgreens, whose share prices dropped following the announcement. Walgreens, which recently updated its app and loyalty program, did not respond to a request for comment. In a statement, a CVS spokesperson said the retailer is “the largest purchaser of prescription drugs in the world and [provides] our pharmacy customers with a wealth of clinical and other support services,” so it is “much more than your corner drug store.” Amazon can’t deliver Covid-19 vaccines To that point, Lovelock noted most consumers are in long-term relationships with their pharmacies and aren’t likely to shift en masse overnight. “I think the legacy players have a decent amount of runway in which to really innovate" and figure out what needs people have, she said. Retailers like CVS indeed have an advantage in their brick-and-mortar locations, which provide in-person services like vaccines. (They can also use their presence in communities throughout the U.S. as a lure for consumers who want to support the local economy.) “A lot of us right now are thinking about, ‘How am I going to get my Covid vaccine next year?’” Trzcinski said. “It’s likely a CVS, Rite Aid or Walgreens, and so that will continue to draw a lot of traffic in the future.” 5 Tips for Pivoting to a Digital-First Strategy During Covid-19 (and Beyond) There’s also an opportunity to retain the 40% of consumers who get their annual flu shots at retail clinics. Delivering those in-person services, Trzcinski said, "will continue to be a value prop for these companies." Expect to see retailers also push harder into healthcare services, like Walgreens’ partnership with primary care provider VillageMD, which plans to open between 500 and 700 clinics in five years, and Walmart Health, which operates 11 in-store clinics offering preventative health care in Arkansas, Georgia and Illinois. Trzcinski said these efforts recognize that “people are not using primary care the way they used to.” In fact, she said 46% of consumers under the age of 65 have not seen a primary care doctor in over a year. “That's why you see so many retail clinics trying to jump into primary care and offer something that's more cost effective, convenient and perfectly transparent in terms of price,” she added. $30 checkups Because Walmart has also differentiated itself this year with pickup and delivery services in retail, Gartner analyst Zach Weinberg anticipates that Walmart will retain its pharmacy customers while Amazon “is going to pick apart a lot more of those dedicated pharmacy companies, like the CVS-es, like the Walgreens, like the Rite Aids of the world.” In addition, Trzcinski noted that Walmart continues to have “a pretty transformative impact on what the healthcare industry looks like today, but also what it's going to look like in the future” thanks to its investment in convenience and transparent primary care clinics. In fact, Walmart Health clinics have a clear fee schedule, offering annual checkups for $20 (kids) and $30 (adults). “You think about the lack of price transparency that exists across the healthcare ecosystem, right?” Trzcinski said. “They're leading with transparency, but they're also coming in at a lower cost than what CVS Health and what Walgreens offer for the same services.” Walmart has also long provided 30-day supplies of generic medications for $4. “They've been pretty aggressive in coming in and trying to make healthcare affordable and accessible to more individuals,” Trzcinski added. Now, Walmart could easily bake in free prescription delivery to its new Walmart+ membership program. “[Walmart+] and Prime are already trying to compete," Trzcinski said. "There's obviously different features within each of them, but it would be an interesting play for Walmart." Prime Healthcare? Meanwhile, expect to see a lot more of Amazon in healthcare. The ecommerce platform is already testing health care services for its employees in Seattle through Amazon Care, which Trzcinski said could easily extend to customers.“We do anticipate that Prime membership will start to include more healthcare services—not only access to pharmacy and having free delivery for medications, but also access to virtual care services,” she added. And while Amazon said it will manage customer data in compliance with HIPAA, Trzcinski noted there is still potential to integrate this data with services like Alexa and the wearable health-monitoring device Halo “to add incremental value” like purchase recommendations, such as low-salt foods for customers with hypertension, or discounts at Whole Foods on products that will keep shoppers healthy. Alexa and Halo could also offer medication reminders. “[Amazon] will have a significant impact on the expectation that consumers have on their pharmacy experience, but also a potential to impact some of the outcomes and behavior of consumers,” Trzcinski added. The good news for shoppers is, regardless of which brands are providing the services, they will inevitably become even more innovative and human-focused. “I think what's happening is Amazon is going to raise the tide of expectations in terms of being accessible and being human in a digital way,” Lovelock said. “The big players come in and … that changes the landscape and then the legacy and small players innovate, catch up and break through again.” READ NEXT: This Innovative Men’s Mental Health PSA Isn’t Quite What It Seems