Amazon Poised to Upheave Healthcare — an Industry at the Ready
They creep silently in the night and strike only when the time is right.
No, this isn’t the beginning of a horror movie script, it’s a description of Amazon’s impending and inevitable upheaval of healthcare. Amazon recently announced a joint healthcare venture with JP Morgan and Berkshire Hathaway, to create Haven, a company with the goal of, “Improving the process of navigating the complex health-care system, and accessing affordable treatments and prescription drugs.” And as history suggests with Amazon, they’re primed to make the right moves (no pun intended).
The total number of individuals employed by these three companies exceeds 1.2 million. That will prove as a testing ground for Amazon to innovate, iterate, and annihilate — and if anyone thinks they will only focus on this measly 1.2 million when it comes to impact, they are 100 percent wrong.
Amazon is coming for the 327 million in the U.S. and eventually the 7.5 billion, across the world.
The next step after Haven is to expand. Considering their footprint, I have a few thoughts on how they might do that:
They’ve already bought PillPack, for a little under $1B. This transaction instantly gave them a pharmacy license in nearly all states. Last week, a number of Amazon Prime members received this ad:
There are over 100 million Amazon Prime members. A number of people already get most things on Amazon, so why not prescriptions? It seems like an easy transition. Should this scare you if you own or operate a pharmacy? In short, yes.
In 2016, PillPack had a very public battle with Express Scripts. I’m not sure of the behind the scenes story, but PBMs (pharmacy benefit managers) wield a lot of power in the pharmacy space.
They control pharmacy reimbursements and, more (arguably most) importantly, the flow of money. Some pharmacies feel that PBMs can change their reimbursements on a whim, while leaving the pharmacy little recourse to fight back. The state of Ohio audited a few PBMs that process for pharmacies in the state. The results didn’t look pretty. PBMs make money on the spread of what they are reimbursing pharmacies and what they negotiate with the pharmaceutical manufacturers.
Kentucky soon followed suit with the auditing of PBMs that processed claims for them. And again, the results didn’t look great.
Which brings me to… PBMs
This is where Amazon is positioned to go next. They have the huge funnel of potential patients (via Prime subscribers) and they have the pharmacy (via the PillPack acquisition). Amazon will build or buy a PBM. That should scare the incumbents more than the acquisition of a small online pharmacy.
As a PBM, Amazon wouldn’t need to make money on the spread. They could keep that cost neutral, across the board. I know this because we process claims for our service at ScriptDrop. After the tech is built, it’s not that expensive for each individual claim to be processed and we don’t own AWS to help lower the cost even further.
Once they have the ability to process claims, that can be repurposed and used for other products.
Prescription Discount Cards
Amazon could then issue a prescription discount card, similar to GoodRx. Most of the prescription discount cards don’t process their own claims. Again, Amazon could undercut all of them on what they are reimbursing pharmacies for dispensed prescriptions. That becomes another customer acquisition strategy for Amazon.
“Use our prescription card at pharmacies across the U.S. and receive the absolute best cash price in the industry. Also, contact us directly to find out if PillPack would be a great fit for you and your family.”
This becomes a logical step, via the Alexa platform. Data is already going through the Amazon PBM and/or prescription card. It would be easy to programmatically populate your quantity and day supply for each prescription.
Alexa then expertly helps you monitor your medication regimen. Once the prescription is ready to be refilled, you can work with her directly to use the Amazon Prescription Card and check if there is a good price in your area for a refill.
If the price isn’t just right, PillPack will happily ship directly to your home via the vast same-day service Amazon has spent nearly $1B, in 2019 alone, to establish for Amazon Prime users.
By using Amazon’s network of prescription management solutions, you could be the lucky winner of an Amazon gift card, (and subsequently consolidate more of your life onto their robust platform).
ScriptDrop and How We Fit In
ScriptDrop is quickly growing our prescription delivery solution. Pharmacies view us as one solution in a multi-pronged effort to fight back against the third thing I mentioned Amazon would do.
We currently make daily prescription deliveries for pharmacies across the country. Our stated goal is to make healthcare better for the patient and, more specifically, to help 1 billion patients. I call it our decision framework. It helps to have a clear-cut compass when making those frequent tough decisions.
Will Amazon make healthcare better? To be honest, I think they will. It may not be them directly, but more the push for others to innovate and iterate quicker.
But that’s OK. As innovators, we all should strive to make decisions with the question of, “How to make healthcare better for the patient?”
Historically, we’ve worked and will continue to work directly with pharmacies (chains and independents), hospital systems, health plans, and pharmaceutical manufacturers. We leverage our custom software solutions to make our partners prescription delivery process easy and hassle free.
Months back, we identified a need in offering a custom and scalable solution, directly to patients.
We will now be offering a direct-to-patient application under the brand of Delivering Health.
Think of it as Amazon Prime… for prescription delivery. As a patient, you can sign up and have your prescriptions delivered within an hour. We leverage our network of regional and national courier partners, as well as our deep integrations into some of the largest ride share companies in the U.S.
We don’t have 119MM other products you can buy like you can with Amazon, but we are healthcare experts, and we’re committed to making healthcare better for each and every person we work with…on our march to 1 billion.
Here’s to hoping Amazon doesn’t annihilate us.