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Amazon captured the industry’s attention once again when it announced it is acquiring online pharmacy PillPack for a reported $1 billion. Here’s how experts say it will affect managed care.
Amazon captured the industry’s attention once again when it announced it is acquiring online pharmacy PillPack for a reported $1 billion.
PillPack is a full-service pharmacy that organizes and delivers drugs to consumers with the specific number of medications that they’re supposed to take at specific times.
Experts share their takes on what Amazon’s acquisition of PillPack means to the industry.
Ed Francis, senior director and leader of life sciences, West Monroe Partners, a business and technology consulting firm:
“This acquisition will make the prescription drug delivery supply chain more efficient given Amazon’s distribution, warehousing, and packaging capabilities with same-day service capabilities. In the medium term, I have no doubt Amazon will take cost out of this process; its track record is really strong. Eventually, the acquisition will be disruptive to all players downstream of drug manufacturing, PBMS, distributors, and even retail.”
Trish Birch, SVP and Global Healthcare & Life Sciences Consulting Practice Leader, Cognizant, a digital technology consulting firm:
“The Amazon acquisition of PillPack signifies a remarkable transition in healthcare that will put more control in the consumer’s hands. Following in the footsteps of Cigna’s acquisition of Express Scripts, the talks between Humana and Walmart, and CVS Health’s planned acquisition of Aetna, Amazon’s recent acquisition could transform pricing models in the pharmaceutical industry by simplifying and streamlining the consumer healthcare experience to achieve higher quality care at lower costs. This is particularly important when considering those with chronic conditions: This population will benefit from coordinated delivery of multiple medications with better medication adherence, management and improved outcomes and cost.
In addition, consumer opinion of healthcare and pharmaceutical businesses tends to skew negative, mainly as a result of pharmacies pricing medications according to the logic they’ve developed as part of PBM contracts. This results in higher prices for common generic drugs for cash-pay patients than insured customers, and prices often vary widely across pharmacies. With Amazon stepping into the pharmacy market, the industry might expect to see more clear pricing transparency that will likely result in higher patient satisfaction.”
Ruchin Kansal, author of “Redefining Innovation,” and leader of the digital business strategy group, healthcare, insurance, and life sciences sectors at Virtusa, a global provider of digital engineering and outsourcing services:
“The PilPack acquisition sets the stage for Amazon to build a connected healthcare ecosystem to serve its 100 million+ Prime members. Healthcare customers want quality, on-demand access, and a hassle-free experience. Amazon has strong competencies in meeting the individual customer needs through its core business. With PillPack, Amazon can rapidly engage in the healthcare market by easing the prescription fulfillment process. This will result in loss of business for retail pharmacies who cannot compete with Amazon’s distribution network and customer interface, and has the potential to improve medication adherence. I predict that in the near future Amazon will expand into other healthcare businesses, such as telehealth and health insurance.”
Randy Vogenberg, PhD, principal, Institute for Integrated Healthcare and chair, Employer-Provider Interface Council of Hospital Quality Foundation:
“PillPack brings pharmacy licensing to Amazon that will allow for drug distribution in at least 48 states, that is important to whatever Amazon would like to implement in healthcare. Recall that they did pull out of the hospital-medical office distribution segment due to realities of relationships among key stakeholders today.
PillPack as a packager is meeting the needs of a segment of the prescription marketplace and shows growth due to baby boomers along with trend to stay at home for healthcare as long as possible. Keeping in mind that current packaging and distribution is focused on maintenance drugs, that leaves at least 40% of the prescription drug market for acute medication use yet to be addressed.
Adherence through their packaging can improve the likelihood of better outcomes but confirmable published data is limited to-date for many solutions including PillPack. Assuming that alternative packaging types available on the market work more broadly than just what PillPack offers today, there are real opportunities to impact overall healthcare costs if Amazon is able to expand its adherence offerings. Through reducing drug waste and improving adherence along with decreasing unneeded medical visits, real value in improved outcomes could be achieved.
It remains interesting as to the possibilities for PillPack with Amazon along with Whole Foods to be innovative or disruptive to the moribund and inefficient drug supply chain. However, it is uncertain as to what exactly will be done or implemented along with when.
Yvonne Tso, consultant in the healthcare practice of AArete, a global management consultancy focused on data-informed performance improvement:
“No one questions Amazon’s expertise in moving merchandise efficiently, but when it comes to drugs, consumers still like to be able to ask their local pharmacists about the medications they are taking. Moreover, online orders take at least 48 hours to be delivered and require a signature, whereas you can pick up a refill from a drug store in real time. Moreover, PillPack may have to rely on multi-source generics for some time before they can gain pricing leverage over single source drug/specialty drug makers, which are forecast to be the fastest growing segment of the drug market.”