Is Amazon Pharmacy For Real?

In the early 1960s, I remember regular visits to Mccoubrie’s Pharmacy in Salem, NJ. We called it the drug store, and it had a soda fountain. We would stop by after school for a cherry coke. The back of the store was the pharmacy. Jack Mccoubrie was a distinguished looking man and a friend of my father. I can picture him on the elevated floor behind the counter filling prescriptions.

A lot has changed since then. In 2019, 80 percent of all prescriptions were e-prescriptions. Doctors accelerated e-prescribing when Medicare starting paying a small bonus if they did so. The e-prescribing process automates the creation of the medication order, but it doesn’t include the patient. You call the pharmacy and ask about the prescription, after you go through a monotonous phone tree of choices. “We don’t have the prescription yet”. You call the doctor’s office and go through another phone tree. “The doctor didn’t get to do it yet. She will do it this afternoon.” Eventually, you get the word the script is ready for pickup. You wait in a long line at the pharmacy. When it is your turn, “What is your address?” If you are lucky enough to have a vacation home, the answer is not always the one they expect. All this is going to change big time.

PillPack was founded in Manchester, NH in 2013 by TJ Parker and Elliot Cohen. The founders had a vision to automate the drug store by packing medications in dosage packets using robots to handle the packaging process. Each little packet shows the date and time for when the medications in the packet are to be taken. The medications and dose are listed, and it can include over the counter medications. There may be one, two, or more packets per day. In June 2018, Amazon.com acquired PillPack for a reported $753 million. In November 2019, the company was rebranded as “PillPack by Amazon Pharmacy.”

The secret sauce in the PillPack acquisition is not the packets, although the packets are a good idea and still available from Amazon. I believe the real value is PillPack is licensed for drug distribution in all states. Although Amazon Pharmacy still offers PillPack as an option, I like the Pharmacy option even better. To get started, you register on the site and provide your medications and your insurance information. It is a very simple process, unlike most things related to healthcare. If you have an existing medication coming up for a refill, you just go to the Amazon Pharmacy and select the medication and choose the option to have Amazon contact the existing pharmacy, say CVS, Walgreens, or Rite Aid. Amazon takes it from there. You get an email saying your refill is ready. You click and it gets added to your cart. The cart shows the medication and the pricing. If it is a new prescription, your doctor can e-prescribe, fax, or call, just like with the traditional pharmacies.

As a pricing example, consider Levothyroxine. There are different manufacturers that make levothyroxine. It may be branded Synthroid, Levoxyl, or Tirosint. Levothyroxine is the most prescribed medication, with more than 100 million prescriptions per year. The price in my cart using AARP UnitedHealthcare insurance was a copay of $14.88. The other option shown in the cart was “Price without Insurance” $3.80, “Includes 79% savings with Prime”. I wondered how that can be. Likely Amazon Pharmacy went to Abbott Laboratories and asked for a price on 10 billion levothyroxine pills.

Once you place the order, you get a confirming email, just like when you order anything else from Amazon. In two days, the Amazon Prime van shows up in the neighborhood as it does every day, with a free shipping package with your medications, just like anything else you buy from Amazon. Amazon Pharmacy only offers a 30-day supply “for now”. Not sure why, but it doesn’t matter. If your doctor prescribes 90 days, Amazon Pharmacy sends you 30 days with two renewals. When it is time for a refill, you get an email. You click, it goes in your cart, you pick your price, with or without insurance, and the refill is delivered. No calling, no standing in line at the pharmacy. It is no surprise the pharmacy stocks all declined the day Amazon announced the purchase of PillPack.

This is just the beginning. Our healthcare system is broken badly, and in my opinion, things are getting worse. Amazon, JP Morgan, and Berkshire Hathaway created a healthcare company to shake up the industry, but it did not work out. I suspect they concluded it is better to take on the industry one segment at a time. Pharmacy is first and it will save billions. Congress is incapable of acting because of the huge lobbying lock on them. I think Amazon Pharmacy is the tip of the iceberg.