Amazon is taking on the drug supply chain, says report

Key Points
  • Amazon may be ramping up conversations with pharmacy benefits managers.
  • The e-commerce giant is a potential threat to many players across the drug supply chain.
Amazon is taking on the drug supply chain, says report

Amazon is ramping up conversations with a group of drug middlemen known as pharmacy benefits managers or PBMs, according to analysts from Leerink Partners. PBMs are a critical part of the drug supply chain, as they negotiate prices with drug manufacturers on one end, and manage pharmacy benefits for insurers on the other.

The report, which was previously spotted by Axios, also outlines the "disruptive" potential posed by Amazon across the multibillion dollar pharmacy benefits and pharmacy arena.

Citing an anonymous analyst, the report states that Amazon may "indeed be in conversations with some middle-market PBMs now, in an effort to get into various contract arrangements."

That suggests that Amazon is a "bigger threat" than many expect, but that it won't be right away. Leerink estimates that it will take about 18 to 24 months for Amazon to get pharmacy licenses in all 50 states.

CNBC reported in May that Amazon was looking to hire a general manager to lead its pharmacy business. And that it had already hired Mark Lyons from Premera Blue Cross, a local insurer, who was tasked with building an internal PBM.

In the ensuing months, analysts and investors asked players across the supply chain were asked about the Amazon threats. Some described Amazon has a potential partner, while others were skeptical that the e-commerce company would move into a highly-regulated space.

-- CNBC's Michael Bloom contributed to this report.

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