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.
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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.”
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.”
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To that point, Lovelock noted most consumers are in long-term relationships with their pharmacies and aren’t likely to shift en masse overnight.