The Amazon Effect Comes Full Swing To Prescription Services
Amazon Pharmacy, the company’s much-anticipated online prescription fulfillment service (built from its acquisition of PillPack two years prior), launched this week. With this announcement (and its past healthcare investments), Amazon becomes a direct competitor with legacy retail pharmacies CVS Health, Walgreens Boots Alliance, and others. In the age of “digital first healthcare,” at-home pharmacy delivery from Amazon taps the growing trend of delivering care to patients where they are: at home.
The concept of prescription home delivery is not novel, however. Amazon brings together various elements and, in doing so, has a unique approach. Its new offering culls best practices and approaches from its competitors and builds on its commerce platform heritage, user experience (UX) design, packaging, and transport and logistics excellence by weaving them together into an intuitive consumer experience. These features include (but are not limited to):
- Ability to track your order. This includes visibility into the supply and logistics of getting your meds delivered. (At this time, no retail pharmacies or pharmacy benefit managers do this.)
- Ease of setup. On average, the process takes five minutes for a new user. Enter your legal name, age, birth gender, and last four digits of your social security number, and Amazon will locate your insurance information to get started. Typically, this information must be entered manually for retail pharmacies. One point of opportunity here is to offer the ability to take a photo of your meds like what CVS Health and Walmart already offer for transfers to another pharmacy.
- Price transparency. Discounts have already been negotiated, and there is clear communication about whether it’s cheaper to use insurance or pay out of pocket. This eliminates the need to use a separate app like GoodRx, save the coupon, drive to the cheapest pharmacy (which could be over 20 miles away), and show your pharmacist proof to get a discount.
- Freedom of choice for packaging. Consumers can select how meds are packaged — e.g., bottles or packets stamped with reminders on what time to take each set of medications, which is helpful for consumers with multiple medications that must be taken throughout the day.
- Online web chat. Amazon offers the ability for you to chat with a pharmacist online to address any questions — something that many retail pharmacies already do, but not all.
- Shared account security. You can set up a PIN to add a layer of security for your medication data if you have a shared Amazon account. Existing retail pharmacies allow you to approve individuals to have access to your data as well as the ability to pick up medications on their behalf. This is important for individuals that act as caregivers and help patients manage their health and medications.
- Analytics to prevent adverse drug events (ADR). Amazon Pharmacy will leverage advanced analytics to analyze and monitor data to prevent ADRs, which is something many retail pharmacies already use to protect consumers. This is key, as ADRs lead to the death, hospitalization, or serious injury of more than 2 million people in the US each year.
Seventy-Two Million Amazon Prime Members In The US Are Interested In Prescription Delivery
While the market is saturated, there’s opportunity for disruption. Our Consumer Technographics® North American Healthcare Topic Insights 1 Survey, 2019 (US) data shows that 27% of consumers want their pharmacy to offer more convenient delivery options, including the ability to order prescriptions online. Amazon Pharmacy delivers on this demand and taps the company’s vast customer base by adding new value for its 120 million-plus Prime members in the US. A recent survey of 2,500 individuals by Cowen & Co found almost 60% of Prime members would consider having their prescriptions delivered. Significant portions of market share owned today by Costco, CVS Health, Walgreens, and Walmart will shift to Amazon. The open question is how much and how quickly.
But Amazon is not alone in this endeavor to capture the hearts of healthcare consumers. With Walmart doubling down on its own healthcare strategy, including a physical presence for healthcare, we could soon see an addition to the Walmart+ program for pharmacy delivery in an attempt to compete with Amazon’s new service. Walmart already offers steep discounts on many prescriptions for consumers and has seen some early success for its “Plus” program.
This New Offering Provides Potential For Incremental Value Across The Amazon Portfolio
Amazon has been close to the vest on what this announcement could mean for its broader portfolio, but there are deeper implications of how this could add more value for consumers. Some of these future developments may include:
- Widespread deployment of virtual care. With Amazon Care already available to Amazon employees, future deployment of virtual care access to a broader population is coming into view. This initial addition for Prime members focused on pharmacy is likely an indicator of broader healthcare services being added to Prime in the future.
- Alexa integration. Companies like Cigna and Express Scripts had already tapped Alexa to support members at home with the ability to say, “Alexa, order refills of my prescription.” If this Amazon Pharmacy data is integrated with Alexa, this could make easy reminders to take medications and order refills a reality.
- Opportunity for tapping into Halo for a complete picture of health. Amazon’s recent launch of Halo could provide you with insights that would bring its full healthcare portfolio together. This includes consumer behavior around sleep and activity to medication management and recommendations for lab participation that may be tied to medication adherence, tracking outcomes, or even data collection of potential side effects.
- Potential purchase recommendations based on health needs. Data privacy concerns abound, but individuals are increasingly open to sharing data if value is given in return. Pharmacy data might yield recommendations on low sodium foods or workout equipment for hypertensive customers. Integration of Halo data could further tailor some of these product recommendations.
- Deeper insight into medication adherence trends from Amazon Web Services (AWS). The battle between public cloud vendors to win the enterprise healthcare market is increasingly focused on introducing new data sources of relevance to healthcare clients. AWS recently launched its AWS Data Exchange, a marketplace offering third-party data — much of which is healthcare focused — for use in model development. AWS could soon choose to further differentiate its cloud platform with de-identified data on prescription supply chain, fill rates, and adherence rates. This would accelerate innovation in the medication adherence space — a $300 billion per year problem that innovators have thus far failed to have an impact on.
The Road Ahead Comes With Challenges
While there is anxiety in the market about what this announcement means for large incumbents and startups alike, the road ahead is not without potential hurdles for Amazon. The company has included features to address some of these, but not all. Potential hurdles include:
- Converting a substantial base of loyal customers. CVS Health, Walgreens, and Walmart have earned the trust of a significant portion of the market. Annually, CVS Health fills over 80 million patients’ prescriptions. However, the question remains if cost will be a decisive factor. Today, CVS Health consumers can get free prescription delivery through its CarePass membership, which is less than half the price of an Amazon Prime membership.
- Concerns about data security and privacy. Amazon will potentially have data on a consumer’s purchasing habits, home environment, and health monitoring. It has built some reassurances into the Pharmacy UX to help alleviate consumer concerns about what data is being collected, how it will be used, and additional features such as the ability to set a PIN for your Amazon Pharmacy account if you share your Amazon account with others. But, at the end of the day, it means consumers will need to be comfortable with Amazon knowing even more about them — and the “creepy factor” may be difficult to overcome.
- Instances when consumers need their medications today. Amazon Pharmacy does not currently support same-day delivery, so if an antibiotic is needed immediately to treat an infection, you will have to go to a local pharmacy. The user interface clarifies this as well to prevent delays in treatment, but additional safeguards in the UX on orders for antibiotics would help ensure consumers understand potential delivery delays.
- Package theft. A sizable customer base coupled with the rise in porch pirates can amplify the risk when it comes to delivery reliability (especially for chronic meds). While the company supports different methods for secure delivery — from lockers to in-garage/in-house drop-offs — you will have to opt in for those. As of the date of publication, Amazon will not be shipping Schedule II controlled medications (which include most opioids).
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Source: Consumer Technographics North American Healthcare Topic Insights 1 Survey, 2019 (US). Base: 4,676 online adults.