
This Is How Amazon Could Invade the Pharmacy Business - matco11
https://www.bloomberg.com/news/articles/2017-11-07/six-ways-amazon-could-upend-the-pharmacy-business
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rwbcxrz
I already have to worry about counterfeit electronics when ordering from
Amazon. I’m not sure I’d trust them with prescriptions.

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manmal
Also, with expensive drugs I would worry that counterfeits could be introduced
within Amazon‘s warehouses by workers, or within the postal system. Open a
package, extract the original, and put the counterfeit in. For drugs that are
worth hundreds of dollars per package, why not?

I expect pharmacies to double check everything they buy, and I somehow doubt
Amazon will be able to ensure safety when the package is handled by 10
different people. If they develop some kind of (digital?) package seal, I
might change my mind. Or every pill container has an RFID chip and is
verifiable with the supplier‘s public certificate.

~~~
yomly
IIRC in The Everything Store, Stone recalled how Jewellery was a struggle
because of its high value to weight ratio. Pharmaceuticals will probably be a
similar problem, but I'm sure Amazon will have a process built in to manage
for this if they chose to move into the area

~~~
katastic
Of course. People assuming that they'd toss drugs in with their random goods
are not even trying to comprehend this business move.

They bought World Foods. They didn't start storing week old bread on their
shelves.

The pharmacy division would be a completely separate process subject to all
the additional _legal_ requirements all the other pharmacies adhere to.
They're not going to just have buckets of Percocet lying around on shelves for
anyone to access.

~~~
chasd00
it would be difficult, every state has different requirements and they'd have
to have a pharmacist licensed in every state to fill the rx. What they'd
probably do is buy up a central fill facility in every state and hope the
pharmacists who work there choose to stay (pharmacists are in short supply).
Also, i'm not sure how they'd handle scheduled prescriptions ( like oxy ). At
least in Texas those have to be reported to the state and e-prescribing is
difficult so most patients end up with a physical scheduled rx that can't be
scanned/faxed in, the pharmacist has to collect the original.

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thisisit
There are lot of stories going around on this, all of which are based on the
client note by Leerink’s Ana Gupte which was released on Friday, setting cat
among the _pharma industry_ pigeons:

[http://www.barrons.com/articles/amazon-pharmacy-could-
make-w...](http://www.barrons.com/articles/amazon-pharmacy-could-make-
walgreens-cvs-sick-1507309531)

This article re-packages all the points from the client note like shipping,
generics, B&M stores etc without even attributing to the original report.

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analog31
It should be easy for Amazon to start delivering my meds: Convince my
employer. Right now, I walk two blocks to Target for new prescriptions, and
I'm required to buy any refills from Express Scripts. My clinic also has a
pharmacy on site that I could use. I'm betting that refills (i.e., stuff
that's taken chronically) is the bulk of the prescription drug business, but
it would be interesting to know if that's true or not. I don't see much fat to
trim.

~~~
adventured
I suspect Amazon isn't overly concerned with trimming the fat in this case
(Walmart took out a lot of what was left of that when they entered the
business). At break-even in pharmacy, while not trimming so much as a dollar
of fat, Amazon benefits big. Here's how:

\- Increased shipping volume. This adds to their market leverage and it can
bolster their own logistics business over time. Anything Amazon can do at
scale, while at least breaking even, is a very big benefit to their flywheel.

\- Another entry into the home, into a person's life. And in this case, a far
more important one than most purchases. If Amazon can sell a 67 year old a
prescription and get into her home, they're no doubt betting they can also
sell her an artificial intelligence tool in the coming years (maybe it takes
three years of advertising the Echo on the side of the prescription delivery
box to convince the customer).

\- It becomes a very sticky repeat business. People will stay with those so
long as you don't treat them horrendously. That buys Amazon time to figure out
new ways to make money in the segment. It may also be a long-term play on the
fact that the US is guaranteed to increasingly shift to government healthcare,
as the ACA or equivalent walks its way up the income ladder by necessity;
Amazon may see an angle in that.

\- Walmart is finally becoming a serious online competitor. They're growing at
2x the rate of Amazon, with about 1/3 the online retail sales. Walmart's
online business appears to be kicking into another gear. They've got a $20
billion per year pharmacy sales business. Then there are obviously the other
far larger pharmacy-centric giants (the big three have ~72% of the pharmacy
business). Anything Amazon can do to press them all in that segment, is a win
competitively. To grow at this point, Amazon has to take from everyone else,
as US consumer spending is expanding relatively slowly.

~~~
snowpanda
Totally agree with what you said. I'd like to add that another part of the
break-even game is that often all it takes is for your competitor to take one
step in the wrong direction, for you to become profitable.

When Blockbuster (for example) took on streaming to compete with Netflix, not
only were they far too late, but they also charged a fee for movies. People
didn't bother because Netflix had unlimited streaming. They also had a poor
catalog if I recall correctly. Too many mistakes.

~~~
chasd00
don't forget the Blockbuster streaming deal involved ( a may have been
originated by ) Enron of all things. It never had a chance in hell.

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dqdo
I think that the Whole Foods acquisition now gives Amazon a physical footprint
to compete with CVS, Rite-Aid, etc. Imagine ordering online and picking it up
at a Whole Foods. After this step, they will find ways to fully by-pass the
physical store and ship you medicine directly via Prime. There is a lot of
money in the pharmacy business and a lot of opportunities for Amazon to enter
this market and disrupt it. I don't think that any of the incumbents have the
technological capabilities to compete with Amazon's supply chain. The question
is not if they will enter. The question is how and how fast.

~~~
kgwgk
To put it into context, Whole Foods has less than 500 stores, compared to 8200
and 9600 for Walgreens and CVS.

~~~
tyingq
Whole Foods also doesn't currently have a pharmacy, unlike many other grocery
chains.

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amelius
Ok, so this is what a winner-takes-all game looks like, and it is getting
pretty boring. Can we now play a different game, please?

We can start by turning Amazon into a utility.

~~~
corporateguy5
But then it would turn into a slow government entity, all the talent will
leave, and our economy would lose a great innovator.

~~~
amelius
> But then it would turn into a slow government entity

Public utilities are not necessarily government entities; they can be
privately owned.

> all the talent will leave, and our economy would lose a great innovator

That talent could work at universities again, so everybody would benefit more
evenly from innovation.

~~~
icebraining
_Public utilities are not necessarily government entities; they can be
privately owned._

Like Bell, who had to be sued to allow people to use modems and fax machines?

~~~
amelius
At least the law was on our side.

Try suing Amazon for a similar cause.

~~~
icebraining
I don't need to - I can not use them.

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Ice_cream_suit
I know the ex-CEO of a generic pharmaceutical firm. Drugs that are wholesaled
at $100 are discounted by the firm to around $25$.

There is much profit for Amazon to harvest.

~~~
aomix
I worked at a distributor throughout college and the week a drug went generic
was party time. The company would ship more of a recently genericized drug in
that week than they had until that point. Dropping to ~25% the original price
is the average but sometimes it would be 10% or less.

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xor1
Looking forward to having my adderall delivered by drone.

~~~
chasd00
heh i take vyvanse and have to burn a morning once a month to get my refill.
It's so infuriating i wrote a telemed system based on webrtc and am selling it
to my doctor so i can see my NP and get my rx snail mailed to me without
leaving the office.

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charpede
Is Amazon going to attempt to tackle the healthcare insurance market? CVS and
Walgreens may have started in that direction, but they rely on EHRs to get
them the industry knowledge they lack. I'm not sure if Amazon would do the
same. That opens patients up to some crazy HIPPA scenarios when Amazon decides
to collect your prescribing visit info to send to the insurance company.

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theklub
I think the brick and mortar pharmacy business is already being cut out by
placing like Optum and express scripts.

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PaulHoule
They ought to buy Pillpack.

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Havoc
Negotiating that legal framework is going to be challenging

