Amazon Could Be The Home of Your Next Prescription Drug

By Paul Gaita 05/26/17

The massive online retailer entering the pharmaceutical business could mean lower prices on prescriptions for consumers.

An Amazon box sitting on a door step.

Shares of pharmacy giants CVS and Walgreens dropped last week after news that appeared to renew its interest in gaining a foothold in the lucrative pharma market.

A report from CNBC outlined several recent internal moves that suggested the retail colossus was taking definite steps to sell pharmaceuticals in the United States, including hiring staff for a professional health care program. Amazon did not comment on the report, though the company has been testing the waters for viability in the pharmacy market for years; according to insiders, the company has held at least one meeting per year at its home base in Seattle, Washington to discuss the possibility.

More recently, it has brought aboard Mark Lyons of Premera Blue Cross to flesh out the role of general manager to oversee more concentrated efforts. The company already sells medical supplies and equipment in the United States, and expanded its Prime Now delivery service in Japan to include drug sales—which are sold to patients with the approval of a pharmacist. The expansion is in line with previous efforts by Amazon, which often tests new product lines in international markets before deciding to bring them to the United States.

Should Amazon fully embrace the idea of selling prescription drugs through its site, the company would be wading into an extremely lucrative market. Retail pharmacy brought in $300 million for prescription drugs in 2015 alone, and the top 15 pharmacies—which include CVS, Walgreens and Walmart—handled about three-fourths of all prescriptions by revenue the following year. The introduction of Amazon to this market might be a boon for both the company and the consumer, according to finance and medical industry experts.

"Having a new competitor in the market would be great," said Kevin Schulman, a professor of medicine at Duke University. "Having a competitor that would be transparent would be potentially even more interesting." Amazon's greatest benefit to consumers might be for uninsured patients or those that buy either generic drugs or brand-name drugs with manufacturers; the retailer may be able to provide these individuals with better prices than those available through brick-and-mortar pharmacies, which have been criticized for concealing the actual price of various medications, as well as rebates and discounts that might be available to consumers.

The company will also have to contend with a host of government regulations and patient privacy requirements that are not part of the traditional retail arrangement. "Prescription transfer laws and e-prescribing make it a little more difficult than putting something in a cart and checking out," said Buck.

Retail brick and mortar pharmacies like Walgreens and CVS have been doing their part to service the community with programs that focus on opioid abuse prevention, offering Narcan without a prescription through the pharmacy, working to halt the prescription drug abuse epidemic by identifying "extreme prescribers of high-risk drugs" and implementing the mandatory use of prescription drug monitoring databases.

These important policies and checkpoints are necessary to help curb the painkiller epidemic and could be hard to implement for any online pharmacy, including one with the scale of Amazon.

Amazon's previous attempt at entering the prescription market was through its ownership stake in the online retailer, for which Amazon CEO Jeff Bezos served as one of its directors. The company was hobbled by the dot-com bust of the early 2000s, and though it maintained a presence online, it never fully recovered from its initial struggles. In 2011, it was sold to Walgreens, which shuttered the company for good in 2016.

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Paul Gaita lives in Los Angeles. He has contributed to the Los Angeles Times, Variety, LA Weekly, and The Los Angeles Beat, among many other publications and websites.