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The Amazon Inc. agreement for the purchase of an online pharmacy paves the way for the internet retailer to make it more convenient to fill a prescription. But the agreement will probably not be enough to solve a bigger problem for patients and their employers: the high cost of many drugs.
The purchase of PillPack will give Amazon a platform to sell drugs without changing the way expensive drugs for, industry experts say. And the agreement does not yet give Amazon the expertise needed to handle the most expensive drugs, biotech drugs that require special handling.
"It's a long way from a fundamental disruption of the US drug channel," says
Adam Fein,
CEO of the Drug Channels Institute, which provides research on the drug supply chain.
The details of Amazon's plans remain uncertain. The company has not said how it will use PillPack to go further in healthcare, after some earlier forays into selling medical supplies and over-the-counter medications.
Amazon declined to comment.
Siphon market share of brick and mortar pharmacies that have long dominated the US $ 413 billion annual market for filling prescriptions say experts. About 5.8 billion prescriptions are filled each year, according to the Drug Channels Institute.
Amazon could attract customers, particularly its loyal Prime members, away from the 64,500 retail pharmacies in the United States by offering ordering ease on the Amazon website and the
Amazon, which had $ 16.7 billion in cash by the end of March, can afford to compete with its competitors on the price to take market share, in the same way as with the books. According to Fein, pharmacies report a gross profit of $ 12 to $ 16 per prescription, but a large portion of this amount is used to fund overhead costs for stores in operation.
Retail pharmacies should fight. Expenses of mail-order pharmacies have slowed in recent years, after pharmacies reduced their prices to attract patients to their stores and lobbied for laws to limit the ability of insurance plans -disease. 19659003]
CVS Health
Corp.
said in a statement Thursday that he already offers the services provided by PillPack, but has not seen a "big change of patients" interested in the prescriptions by mail. "We are well positioned in the market and ahead in this area," said CVS.
On the lower end of the drug costs, the Seattle company could have an impact. Amazon could quickly apply its order fulfillment and dispensing capabilities to pills, which usually do not need special handling like cold storage. And Amazon may be able to use its bargaining power to offer generic pills, often made by several competing rival manufacturers, at a price low enough for patients to pay without the help of their drug plans. health. Online retailer officials have met with generic industry leaders to learn about the company, according to people who are familiar with the discussions.
But industry experts say that drug spending is now attributable to the extremely expensive biotechnological therapies, which are made from living organisms, often infused or injected, that require cold storage and that are not distributed by retail pharmacies. These therapies are typically sold in specialty pharmacies that have the ability to handle and dispense complex therapies – and many have not lost their patent protection, so they are sold by one manufacturer who can charge higher fees .
Amazon, perhaps staying, at least initially, selling such drugs, which treat diseases such as cancer, multiple sclerosis and rheumatoid arthritis.
Much of the power of drugs is in the hands of pharmaceutical intermediaries. negotiate discounts for employers and insurers. Analysts have speculated that Amazon may be interested in taking over the work of PBMs, who have faced criticism for charging patients for copais or high deductibles and making money on price increases. medication.
But Amazon chose to focus A big foray into pharmaceuticals
PBMs said they'd be happy to work with Amazon, according to Ana Gupte, an analyst at Leerink. "I do not see why they would become a PBM," she says.
Industry experts say that Amazon could take away some of the mail-order business that drug benefit managers provide through their own pharmacies. According to PB Muken, an analyst at Evercore ISI, PBMs earn about half of their profits by distributing drugs directly to patients.
PillPack also depends on PBMs to be paid by the insurers of the patients. The current PillPack contract with
Express Scripts
Co.
, one of the largest PBMs, expires at the end of July, according to Express Scripts spokeswoman
Brian Henry.
"We did not reach an agreement on rates [payment] and an investigation" on PillPack's compliance with the terms of the contract "is under way," said Henry. "If PillPack chooses to end our agreement, we are committed to not failing care for our patients."
A spokesperson for PillPack declined to comment.
Write to Jonathan D. Rockoff at [email protected] and Joseph Walker at [email protected]
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