Amazon’s interest in the prescription drug business as ripe for disruption took a huge leap forward with Thursday’s announcement that the e-commerce giant is buying online pharmacy PillPack.
While the start-up is relatively small with about $100 million in revenue last year, it could serve as a beachhead for Amazon’s broader ambitions in health care.
Here are three major ways this could change the way Americans get their medications, according to Arielle Trzcinski, senior Forrester analyst covering health-care technology.
1. Same-day delivery through Prime
“If I’m discharged from a hospital or a doctor’s office with a prescription, I’m going and waiting in line at CVS or Walgreens. That goes away with the incorporation of PillPack; I no longer have to go and wait in line. I see this getting incorporated into the Prime delivery process, potentially for same-day delivery in the areas that’s available. Where it’s not, if it’s not your initial prescription, maybe your refills.
“I think it’s a game-changer for folks like Walgreens and CVS, who will see a significant hit. People want a convenient, personalized process for healthcare. They want a more retail-like experience tailored to them and their needs. Beyond that, a number of chronic disease patients tend to have limited mobility or barriers in terms of transportation. Now we’re eliminating the barrier of having them get to the brick and mortar.”
2. Amazon’s voice assistant Alexa
“Alexa’s already being used in a number of pilots to capture information from patients in their homes, doing everything from medication reminders to helping them order a Lyft to get them to an appointment. So if you think about Alexa reminding you to take your medication, it also knows how much you have left to take. Amazon would automate that process, and say, 'Okay, I know we’re nearing the end of the month, so I’ll automatically refill your prescription to make sure you get that on time.'
“If you don’t want to take your drugs, is there an opportunity for Alexa to also engage with that patient in a conversational way, to say 'How do you feel today?' It could alert the provider to say, this patient might be experiencing negative side effects that leads to non-adherence of medication. Here’s what I captured from this patient, you may want to pick up the phone and call them.”
3. The Amazon-Berkshire Hathaway-JPMorgan health-care venture
“A lot of the work Dr. Atul Gawande [CEO of the new joint venture] has done has focused on costs. PillPack being incorporated into Amazon should help them target that cost conundrum we’re in. They’ve said, how do we control chronic conditions, and medication non-adherence [patients neglecting to take their drugs] is a huge issue when it comes to chronic conditions; it’s a driver for hospitalizations. It's a significant driver of cost in the healthcare world. Alexa can be there to help remind patients to take that medication. I’ve seen the cost of non-adherence being from $100 billion to $250 billion a year.”
Shares of drugstore companies Rite Aid, Walgreens Boots Alliance and CVS health all plunged Thursday after the news, losing about $12.8 billion in market value. Amazon spent just under $1 billion for PillPack, snatching the business from rival Walmart, according to TechCrunch. CNBC reported on Walmart’s interest in PillPack in April and that Amazon had also held discussions with the Boston-based start-up.