Amazon launches Amazon Pharmacy for prescription medicine delivery
The online giant said it also will give discounts of up to 80% off generic drugs and 40% off brand name medications to Prime members when they pay without insurance.
Prime members will get perks like free delivery and discounts on drugs.
Amazon said customers can also compare drug prices, including branded and generic versions, and have phone access to pharmacists 24 hours.
Amazon on Tuesday launched an online pharmacy for delivering prescription medications in the United States, increasing competition with drug retailers such as Walgreens, CVS Health and Walmart.
Called Amazon Pharmacy, the new store lets customers price-compare as they buy drugs on the company’s website or app. Shoppers can toggle at checkout between their co-pay and a non-insurance option, heavily discounted for members of its loyalty club Prime.
The move builds on the web retailer’s 2018 acquisition of PillPack, which Amazon said will remain separate for customers needing pre-sorted doses of multiple drugs.
According to Healthcare Weekly, the pharmacy industry is worth $312 billion in the US, with annual growth rates of 3 percent driven primarily by the rise of online stores and home delivery. Given Amazon’s prowess in logistics and its network of warehouses and drivers, entering this space seems logical. And at a time when more people are staying at home because of the pandemic, the prospect of delivering medication is even more attractive.
“As more and more people look to complete everyday errands from home, pharmacy is an important and needed addition to the Amazon online store.”
Introducing Amazon Pharmacy. 💊📋📦
— Amazon (@amazon) November 17, 2020
Prescribed by your doctor, delivered by us. ▶️ https://t.co/tGNwM0I9IY pic.twitter.com/6pko1sRTvj
Shares of pharmacy chains, drug wholesalers and grocers fell in afternoon trading. Amazon’s shares were up nearly 1%.
Over the past two years, Amazon has worked to secure more state licenses for shipping prescriptions across the country, which had been an obstacle to its expansion into the drug supply chain, according to analyst notes from Jefferies Equity Research.
The company founded as an online bookseller has disrupted industries including retail, computing and now potentially pharmaceuticals, drawing criticism of its size and power from labor groups and lawmakers along the way.
TJ Parker, PillPack’s CEO and vice president of Amazon Pharmacy, said in a statement the retailer aimed to bring “customer obsession to an industry that can be inconvenient and confusing.”
The company faces entrenched competition from Walgreens Boots Alliance Inc, CVS Health Corp, Walmart Inc, Rite Aid Corp , Kroger Co and others. Take-up of online ordering of drugs has been low, according to market research from J.D. Power.
“Amazon’s launch of an online pharmacy is a meaningful threat to brick and mortar pharmacies,” Northwestern University’s Kellogg School of Management professor Craig Garthwaite said.
“These retail pharmacies must now offer more than just easy access to a prescription.”
Shares of Walgreens Boots Alliance, Rite Aid and CVS tumbled between 8% and 15%, while those of drug distributors McKesson Corp, Cardinal Health Inc and AmerisourceBergen Corp were down 3% to 7%.
Amazon injects a new look and feel into a space that has been dominated by a few large mail order pharmacies like CVS, Cigna Corp and UnitedHealth’s Optum, analysts from brokerage Evercore ISI said in a note.
“New entrants to the highly competitive pharmacy market come as no surprise to us,” CVS Health said in a statement. “While pharmacy is a core component of our business, CVS Health is so much more than your corner drug store.”
Now on Amazon: insulin and inhalers. The company said that it has opened an online pharmacy, giving shoppers the chance to buy their medication on their phones and computers. The move propels Amazon into a new business and could shake up the industry. https://t.co/EFSyKsSrVC
— The Associated Press (@AP) November 17, 2020
Walgreens said in a statement it already provides a full and growing range of pharmacy, health and wellness solutions to its customers and patients, and offers free same-day and next-day delivery options.
Should Prime members prefer buying in person, Amazon said its discounts on non-insurance purchases apply at more than 50,000 brick-and-mortar pharmacies - including those run by rivals. Inside Rx, a subsidiary of Cigna’s Evernorth, administers that benefit, Amazon said.
Still, the pandemic may help bring drug orders online. E-commerce has surged this year as governments told people to stay home to stave off infections of COVID-19, and Prime members - more than 150 million globally - may be receptive to buying medication online now that it’s from Amazon.
The company said Prime subscribers get up to 80% off generic and up to 40% off brand drugs when they pay without insurance, as well as two-day delivery.
Amazon’s online pharmacy is not yet available in Illinois, Minnesota, Louisiana, Kentucky, and Hawaii, a spokeswoman said.
