How Amazon’s Acquisition of PillPack Will Affect Health Care

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Jul 24, 2018 · 4 min read

Many people believe the American health care system holds significant opportunity for improvement, whether it be around rising costs or putting people at the center of care. Recent announcements disrupting status quo include Amazon, JPMorgan and Berkshire Hathaway’s joint venture to create a health care “mega-company” and most recently, Amazon’s $1 billion acquisition of PillPack.

As consumers’ lives get busier, they want convenience, and a growing list of brands and services are offering it. Amazon, Walmart and a slew of other companies with strong e-commerce operations have made ordering and receiving everyday essentials easier with subscription-based deliveries of everything from clothes to meal-prep kits, packaged, organized and delivered based on personal preferences.

Medicines can be automatically refilled using online services now, too, and PillPack offers this along with the convenience of personalization to which consumers have become accustomed. When it comes to pills, convenience is an exciting proposition — especially for those who take daily doses to address chronic health conditions. Millions of Americans take medicine daily.

One common pain point of prescription medicine is keeping track of doses and refills. PillPack describes itself as “a full-service pharmacy that sorts your medication by the dose and delivers to your door.” Instead of bottles of multiple pills, a pharmacist creates small packets with different doses for each distinct time of day.

While it is too early to know how PillPack will actually affect the ecosystem of pharmacies and health care providers, consumers and caregivers, industry insiders have some predictions.

Health Care Providers

Tim Gentilcore, director of retail pharmacy at Mission Health & Healthy State believes PillPack will have a positive impact for health care providers since it could translate to increased compliance from patients. Better compliance should lead to better health outcomes. This is especially the case with those managing chronic conditions such as diabetes.

“Community providers and pharmacists are seeking bidirectional transparency to better counsel patients on their prescriptions,” Gentilcore says. “Providers would like to see their patients’ entire prescription profile, and in turn, pharmacists would like to see the corresponding medical data. PillPack offers a potentially great proposition that may further support the important continuum of care.”

Pharmacies

With the acquisition of PillPack, Amazon has made it easier to order and manage pills — eliminate the need for local pharmacies in many cases. It follows then that pharmacies might not favor this acquisition, especially since Amazon’s mobile app is one of the most popular among smartphone users.

On the day the acquisition was announced, stocks of top pharmacy chains dropped significantly — some by as much as 10%.

“In addition to the personalized services that local pharmacies offer patients, there will be those instances when patients need to fill a new prescription right away, and local pharmacies will remain critical for that need,” Gentilcore says.

However, local pharmacies are already facing bigger competitors than PillPack who are disrupting their model. Unfortunately, for consumers there’s no reason to think this competition will affect drug prices.

E-commerce is already disrupting traditional bricks-and-mortar retailers; now technology is extending the reach of health care with telemedicine. To compete, providers and pharmacies must be ready to serve people with omni-channel access and delivery and train staff on how that delivery model will impact operations.

Consumers and Caregivers

Technology continues to provide advancements in life-saving medical devices, as well as overall convenience with patient portals and home delivery of prescriptions. PillPack’s proposition suggests consumers can eliminate phone calls to doctors and pharmacists to orchestrate orders and payments. Amazon saves customers time — one of the most precious commodities of customer experience.

For customers with aging, ailing parents, PillPack’s innovation offers a strong value proposition for helping caregivers manage pills. PillPack’s proposition offers greater peace of mind that elder relatives or even children won’t mix up doses since a pharmacist has created single-dose packets for each dosing moment.

Convenience and simplicity driven by technology continue to power the disruption facing legacy brands in every industry, whether it be fashion, food, transportation or health care. Providers must figure out how to leverage technology and simplicity to transform their practices to make services accessible and convenient.

About the Author |Carolyn Kopf

Carolyn Kopf is the founder and managing partner of C.E.K. & Partners, an Atlanta-based branding firm. Carolyn can be contacted at 404.345.6447 or via email at carolyn@cekpartners.com.

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