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Amazon In The Pharma Space

By: Lynnsey Rijos

The recent announcement of Jeff Bezos nabbing the title of richest man in the world is not the only Amazon-related news to stir up a buzz. There have been talks in the industry about Amazon dipping its toe into pharma waters for a little while now. Considering Amazon continuously makes moves that cause other companies to sweat, it wouldn’t be a real surprise if those rumors were to come to fruition. They began to swirl following the retail giant’s acquisition of pharmacy wholesale licenses in 12 states.

So, what could this mean for the pharma industry?

First, it should be made clear that the 12 licenses acquired does not constitute Amazon putting their hat into the ring. There are many, many more licenses that Amazon, or any other company, would need to have in place before they can formally be a distributor of pharmaceutical products or an actual pharmacy. Can it be done? Of course, they’re Amazon. Plus, owning Whole Foods opened the door for Amazon to have a physical location to set up pharmacies.

Second, while mail order pharmacies are nothing new, they aren’t as popular currently. However, the growth potential is imminent. It would make sense for Amazon to bring the online pharmacy distribution model to the forefront, and ultimately dominate. Knowing this has prompted retail pharmacies like CVS to announce new offerings, such as fulfilling prescription drug orders for same-day and next-day delivery in select markets, starting in 2018 – all things Amazon already offers via their Prime Membership and can easily apply to the wholesale prescription drug market.

While retail pharmacies are feeling the pressure, and experiencing plunging stocks, some pharmaceutical manufacturers have been welcoming Amazing with open arms. A recent article by CNBC notes that pharmaceutical companies are looking forward to the Amazon potential disruption of the Pharmacy Benefit Manager (PBM) space. PBMs act as the middlemen between whoever is paying for your drug (Medicare, your insurer etc.) and whoever is selling the drug to you. According to a biopharma CEO, “We’d be fools not to consider anyone who can disrupt the insurance/PBM stranglehold these companies have over patients and us.”

It is reported that Amazon is expected to make an official announcement in the coming weeks (before Thanksgiving) on whether they plan to enter the pharmacy space. If it’s true, Amazon has the means and resources to make it happen. They’ve already dominated retail; we’ll just have to see if Amazon can dominate healthcare.