Table of Contents
- Amazon has been given approval to be a wholesale distributor of pharmaceuticals in 12 states
- High barrier to entry
- Health care is the last mile of e-commerce
- CVS Health acquires Aetna
- Amazon won’t immediately replace local pharmacies. But they will.
- Telemedicine will be the front door Amazon opens into the pharmacy market, and your home
Amazon has been given approval to be a wholesale distributor of pharmaceuticals in 12 states
Amazon Prime will coerce its healthcare system by making medical data services available for the Amazon Echo. All we have are the preliminary details of its strategy to embed into the $560-billion-per-year market prescription drug industry.
It’s the only route that Amazon has. The monopsony that will one day flip its script and become a monopoly needs to buy profitability. Their Earnings v Revenue v Everything Else has gone from good to great to bad.
And now we are here. Operating margins for major drug chains like Walgreens and CVS run about 5.5 percent, twice as high as Amazon’s total operating margin.
Amazon is assembling the team to staff its entrance, hiring Mark Lyons, an executive from Premera Blue Cross. Lyons created an internal pharmacy benefit manager for Amazon’s employees. Amazon was its own guinea pig.
High barrier to entry
Most states require pharmacies to be licensed and registered before they are allowed to ship medicines to consumers. It’s an opaque relationship between the insurers, drugmakers and pharmacy benefit managers who negotiate the prices and discounts, making it difficult for outside distributors to break into the field and make an adequate profit.
Health care is the last mile of e-commerce
A consumer can buy almost anything online, but there are still barriers that compel patients to physically seek out doctors and pharmacists in order to obtain medicine.
CVS Health acquires Aetna
CVS becomes a health-care company that not only sells drugs and negotiates prices but also leverages its patient data to manage health-care costs.
Companies like CVS Health are vulnerable, prescription drug sales will cramp sales at CVS retail pharmacies, which already face strong competition. It will also interfere with CVS business of negotiating drug prices with pharmaceutical companies. the weak link is retail staff. That will be extinct’d.
Amazon won’t immediately replace local pharmacies. But they will.
It’s a slow’ish transformation. They’ll start by serving as an intermediary between health insurers, consumers, and the rest of the healthcare industry by working with a Pharmacy Benefits Manager which will provide access to patient data and the potential to cross-sell related products.
“Imagine seeing a virtual doctor on your Amazon app, having it prescribe you a certain medication, and then tapping a ‘buy now’ button — all without leaving your home.”
Telemedicine will be the front door Amazon opens into the pharmacy market, and your home
Virtual visits have improved access to professional medical expertise. The Amazon Prime platform can be exploited to seamlessly integrate the process of ordering prescription drugs from its website into the virtual visit experience of major telemedicine vendors.
The Amazon checkout process will approve the order sale and delivery of prescription medication directly to the patient. Good for the patient, good for the doctor, horrible for society.