Dive Brief:
- Amazon announced Tuesday it’s launching an online pharmacy that offers free two-day shipping for Prime members. Amazon Pharmacy will initially be available in 45 states, with more adding the service over time, according to CNBC.
- Amazon also announced a savings program for Prime members, offering discounts of up to 80% off generic and 40% off brand name medications for customers paying without insurance. The program is available through Amazon Pharmacy and at more than 50,000 brick-and-mortar pharmacies across the U.S.
- Amazon Pharmacy and the Prime savings program launch Amazon further into healthcare at a time when more consumers than ever are ordering prescriptions for home delivery. The moves also promise to further disrupt the pharmacy industry, including many grocers that have struggled to keep pace with rising costs and complexities.
Dive Insight:
The launch of Amazon Pharmacy comes as no surprise to industry watchers. The company bought pharmacy provider PillPack in 2018 and has for years been discussing expanding deeper into healthcare. Amazon Pharmacy uses the software, fulfillment infrastructure and industry relationships laid down by PillPack, CNBC reported.
Customers using the service first fill out a “secure pharmacy profile” with their insurance and health information, including allergies. Doctors can then send prescriptions directly to Amazon Pharmacy, or request a transfer from another pharmacy location. While browsing, shoppers can compare the price with and without insurance, as well as their Prime savings, similar to shopping for other products on Amazon. They can also order refills through their online profile.
While Prime members get free two-day shipping on prescriptions, non-Prime members get free delivery within five days and can upgrade to two-day service for a $5.99 fee.
Because pharmacy is a high-touch industry, Amazon offers a customer assistance line staffed by pharmacists 24/7. The service complies with HIPAA guidelines and does not share protected customer information for advertising and marketing without clear permission. Amazon Pharmacy also doesn’t deliver Schedule II controlled medications, which includes most opioids.
The move comes as more consumers than ever are ordering their prescriptions online, with sales growing 20% a year and expected to hit $131 billion by 2025. Brick-and-mortar chains like Walmart and Costco have extended prescription delivery services in recent months, including same-day service.
Amazon is putting further pressure on grocery pharmacies, which have struggled to keep pace with rising costs. Regional grocers, in particular, have had to cope with falling prescription reimbursement rates and an inability to negotiate better prices. Schnucks, Raleys, Marsh, and Lunds & Byerlys are among the list of grocers that have sold off some or all of their pharmacy operations in recent years.
