When Amazon spent $750 million to acquire the online pharmacy PillPack in 2018, it was clear the tech giant had interest in the prescription drug market. Now we know how serious it was.
Amazon will start selling prescription medications on its main Amazon website and app on Tuesday, and will offer two-day delivery of these medications to Prime members for no extra fee. Prime members without prescription drug coverage, or with coverage that isn’t great, can also save up to 80% on generic and 40% on brand name drugs when paying out of pocket without insurance. Prices with, and without insurance, can be compared at checkout.
“Our goal is to make accessing prescription medications as simple as any other purchase: saving customers time, giving them more control over their purchases, and helping them stay healthy,” Amazon spokesperson Jacqui Miller said in an email.
Prescription drugs are a $500 billion market in the US, with patients spending $67 billion out of pocket at US retail pharmacies in 2019, according to IQVIA, a health data provider. Amazon’s brick-and-mortar retail competitors like Walmart, Target, and Costco all have significant pharmacy presences across their chains of stores, and Amazon wants a piece of that, too. When Amazon executives talk about the desire to sell every genuine product in the world through Amazon.com, it’s now clear that medications aren’t excluded.
Amazon’s acquisition of the startup in PillPack in 2018 gave the company entry into the growing online segment of the pharmacy industry, with a focus on Americans who have chronic illnesses and take multiple medications every day. PillPack presorts medications for its customers, before shipping them to their door. An Amazon spokesperson said customers with those prescription medication needs should still order directly through PillPack, which operates five pharmacies in the US and is licensed nationwide, but does not ship to Hawaii.
But by offering the option to purchase prescription drugs through the main Amazon website, the tech giant is attempting to appeal to a broader base of consumers who don’t take multiple medications daily, but might need a prescription drug in the house — perhaps blood pressure medication, an Epipen for a food allergy, or prescription pills for anxiety. However, Amazon’s online pharmacy offering isn’t a fit — at least not yet — for customers who need a prescription filled the same day for an illness that needs immediate treatment.
Patients who want to use Amazon to purchase medications can instruct their doctor to send prescriptions to Amazon Pharmacy just like any other retail pharmacy. The company said it accepts “most” insurance plans.
The discounts Prime customers get when paying for medication without insurance are administered by a separate company called Inside Rx. Inside Rx has relationships with more than 50,000 pharmacy locations, meaning Prime members can also use these discounts at pharmacy competitors like Walmart, Costco, CVS and Walgreens, with the latter two offering free home delivery of prescription medication.
Over its 25-year history, Amazon has convinced online shoppers to trust buying an ever-expanding assortment of product types from the company: from books and DVDs in its early days, to clothing, jewelry and packaged foods, to vitamins, supplements, and fresh groceries more recently. But perhaps no new product launch will test the trust that people have in Amazon more than whether they trust the company with prescription medication. After all, Amazon does have some counterfeit issues, and last year notified customers that a merchant had sold knockoff supplements through Amazon.com.
Launching the new service in the midst of the pandemic, however, may help the adoption curve, with the potential that more people will want to avoid waiting in line at brick-and-mortar pharmacies as Covid-19 infections soar nationwide. Amazon already has seen an enormous increase in its online grocery business during the pandemic.