Amazon and PillPack

Amazon announced recently it will acquire the Boston-based online pharmacy company PillPack, a company that offers pre-sorted doses of medications, home delivery, refill and renewal coordination. PillPack is a full-service pharmacy that delivers a better, simpler experience for people who take multiple prescriptions a day.

The deal represents a move for the retail giant to enter the pharmaceutical supply chain. Coupled with Amazon’s joint partnership with JPMorgan and Berkshire Hathaway to address the “profit-making incentives and constraints” in the employer and consumer healthcare markets, the news further cements Amazon as a disruptive force in the healthcare industry.

What the Acquisition Means

Most immediately, the deal represents a formidable challenge to pharmacy chains including Walgreens and CVS health Corp., the two largest drugstore chains in the U.W.

The biggest takeaway for employers is that new and innovative cost containment efforts may be available sooner than expected. Amazon reports the deal with PillPack will close during the second half of this year.

Amazon’s entry into the pharma business has also prompted other industry deals, including CVS’s bid for Aetna and Anthem’s plan to launch a PBM, IngenioRx, in 2020.

PillPack has mail-order pharmacy licenses in all 50 U.W. states, which could allow Amazon to expand pretty quickly. PillPack also has relationships with most major drug-benefit manager, including Express Scripts and CVS. Those ties will give Amazon access to much of the prescription drug market in the U.S.

Prescription drug costs are one of the largest cost drivers in the employer space, so changes to the supply chain could be critical for employer groups, especially if Amazon is successful in reducing administrative costs and improving efficiencies. This follows other trends in the employer space, including the rise in self-insurance, representing business leaders’ need and desire for more control over health care costs.

Did you Know

The average annual cost of treatment with a single specialty drug is only slightly lower than the median household income, which is $57,617?

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