Thanks to high deductible health insurance plans and consumers footing more of the bill for their healthcare, Amazon (AMZN) is seriously considering entering the multibillion dollar pharmacy market.
Although the ecommerce giant has reportedly had at least one meeting per year to discuss entering the market for prescription drugs for some years now, two people familiar with its plans said this time the talks are much more serious. It hasn’t committed fully either way but it is hiring a new general manager to lead the effort and come up with a strategy, reported CNBC noting the general manager would be placed under the consumables business.
CNBC reports the online retailer is also beginning to recruit from the pharmacy industry as it recently began hawking medical supplies and equipment in the U.S. It is hiring employees for the company’s professional health care program to make sure it meets regulatory requirements and brought on board Mark Lyons of Premera Blue Cross to develop a pharmacy benefits manager for Amazon workers, noted the report. In Japan, Amazon has expanded its Prime Now service to include medicine and cosmetics. (See also: Amazon Set to Disrupt Auto Parts Industry)
The push into the pharmacy market in the U.S. comes at a time when consumers are looking for cheaper ways to get their medications as company after company pushes more of the healthcare burden on to their workers. With the appeal of Obamacare in the House of Representatives just a couple of weeks ago there are real concerns the amount U.S. citizens have to pay is only going to get worse. (See also: Opinion: Obamacare Repeal – Cruel, Costly, Corporate)
It’s also a big business in the country with CNBC noting that in the U.S. more than 4 billion prescriptions are ordered annually. In 2015, $300 billion was spent on prescription drugs. Amazon will face a lot of competition and would be navigating through unchartered waters, but if it has the same success it has had in other segments of retail, it could be a boon for both the company and consumers. Stephen Buck, co-founder of GoodRX, a company that aims to save consumers money on prescription drugs, told CNBC he thinks the market opportunity for the ecommerce giant is between $25 billion and $50 billion, granted it can execute flawlessly. Because of the regulations in the medical drug market the executive cautioned there are challenges ahead. "Prescription transfer laws and e-prescribing make a little bit more difficult than putting something in a cart and checking out," he said in the report.