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PillPack acquisition is the key to Amazon’s plan to cut down healthcare cost

Amazon’s PillPack acquisition will bring a mix effect in the US pharmacy industry. While big players would leverage digital pharmacy to remain competitive, Analysts believe that Amazon would focus on five areas to expand its operations in the sector.

The US $300 billion online pharmacy market is expected to experience huge changes in the nearest future following Amazon’s PillPack acquisition in July.

While the retail giant marks its effort to participate in the healthcare space after liaising with Berkshire Hathaway and JPMorgan Chase to reduce the cost of covering employees, competitors such as Cigna and Rite Aid are making consolidation plans to put up a good fight for a share in the market.

Bernstein analysts have estimated that at least 70% of prescriptions would be ordered online, as part of the changes we should expect in the healthcare industry. The analysts also suggested that Walgreens, CVS, and Walmart could try to invest in digital pharmacy.

A research by the Commonwealth Fund opined that the US healthcare system is a convoluted mess. The study found that among all nations with high-income, the US healthcare system is the worst despite costing the most. Amazon’s primary aim in joining the sector is to dispense the middlemen inflating the cost of healthcare.

PillPack is a digital pharmacy store that delivers medications in pre-sorted dose packaging. While they ensure on-time delivery of shipments in every part of the US, except Hawaii, PillPack also coordinates renewals and refills.

Analysts at Bernstein believe that Amazon would focus on the following five areas to boost its digital pharmacy services.

  • Amazon will improve the user experience by making the interface more user-friendly to attract more patients. The retail giant firm could do this by implementing its existing retail system.

  • While digital pharmacy PillPack has its existing infrastructure to function independently, the idea would not last long. Amazon will find ways to integrate the startup’s market into its current model to optimize its operation.

  • Amazon will introduce new measures to expand PillPack’s health insurance coverage.

  • The pharmacy offerings would include Prime membership in the coming future as Amazon is popular with such offer. They could offer benefits to individuals with membership and may include pharmacy benefit managers in the coverage network.

  • Amazon could offer price shopping tools and automated kiosks. And most likely going to set up an infrastructure for clinical support, offer specialty home delivery and coupons.

Amazon’s plan to overhaul the US pharmacy market means a lot of new challenges to the already existing market players. Analysts are predicting a massive impact on independent and small pharmacy stores. Bigger pharmacies are not entirely on the safe side either. They could lose some of their customers while gaining some from the small pharmacies in as much as they would try to develop digital pharmacies to remain competitive.

While Amazon and PillPack are likely going to need a distributor to operate, other distributors will be largely displaced, especially those making profits from independent and small pharmacies.

PillPack acquisition reflects more betting on healthcare by CEO Jeff Bezos after a 40% stake in yielded nothing.

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