Weighing in on Amazon’s Entry into the Pharmacy Industry

Weighing in on Amazon’s Entry into the Pharmacy Industry
Eli Eggen, PharmD, West Side Community Health Services

Background: Healthcare in the United States has been a hot-button issue following last year’s heated presidential election.  Proposed legislation to restructure designated federal funding outlined by the Affordable Care Act (ACA) has been the primary focus of the ongoing debate on Capitol Hill; as these policy changes would have a significant impact on those currently enrolled in ACA plans and the types of healthcare services covered by individuals’ insurance.  While the best course of action to improve the health of our nation may be ambiguous, the need for change in the healthcare system is evident.  The Commonwealth Fund, a private foundation whose purpose is to promote a high performing healthcare system, recently published a report comparing healthcare across 11 high-income countries.  Data shows that the U.S. has spent more on healthcare than any other country in the world since 1980.  This amount continues to increase at a disproportionate rate when compared to other developed nations, yet the U.S. consistently ranks low, if not the lowest, in performance rankings such as healthcare access (in terms of affordability), equity (in regards to disparities between low and high income adults), outcomes (i.e. infant mortality, life expectancy) and administrative efficiency (i.e. coverage restrictions).  

As the “baby boomers” age, the number of individuals living with chronic disease will continue to increase along with the demand for primary care services.  Poor access to primary care contributes to inadequate prevention and management of chronic disease, delayed diagnoses, non-adherence to medication regimens, wasteful use of drugs and technologies, as well as safety concerns and poor coordination of care.  There does not appear to be any resolution to the current political stalemate in the near future, but recent events in the private sector may cause enough disruption of the current climate to provide us opportunities to perform at a higher level.

Recent Events: Media coverage on Amazon’s entry into the pharmaceutical arena has been picking up steam even though the company has yet to make any official comment.  The online retail giant purchased Whole Foods® earlier in June, offering the company its first physical presence.  Amazon continues to attract attention from news outlets as evidence continues to be uncovered and suggest the rumors are true, further fueling speculation on the impact they could have on drug distribution.  Journalists have also started to discuss Amazon’s potential to shake things up in managed care, and other developments indicate some pharmacy benefit manager (PBMs) are already feeling the pressure from the potential competitor.  While shares of drug store chains have dropped sharply in recent weeks, CVS Caremark began merger talks with Aetna and made an announcement in November of 2017 that its pharmacies will offer next-day delivery of prescriptions (and even same-day services in some big cities) as early as December 2017.

Discussion: Health leaders are faced with a difficult task when it comes to developing a strong strategic plan given the uncertainty of the current and future climate of healthcare.  Predicting the many possible landscapes that could result from a disruption can only help to prepare those in the industry to effectively utilize the new environment to innovate the way healthcare is provided.  Leading change efforts that drive innovation in the delivery of care should focus on improving upon identified weaknesses as well as preparing for anticipated needs of the system.  Meeting the demands of healthcare’s current needs will provide a favorable environment to assist patients with meeting their health goals.
 
The debate continues whether or not Amazon will actually enter the prescription marketplace due to the logistical barriers imposed by the numerous and complex regulatory requirements, which can vary from state to state.  However, many healthcare experts offer opinions on Amazon’s potential to create waves throughout the industry.  Amazon strives to stay true to its mission of supplying consumers with a desired product at the lowest possible price and the utmost convenience.  The new physical space, potential buying power, and distribution system provide the business an opportunity for optimizing the distribution and dispensing of prescription medications if able to overcome the expected barriers.  Of the current 300,000 pharmacist workforce, there is an abundance working in practice settings overburdened by dispensing tasks and administrative duties.  These demanding responsibilities often prevent pharmacists from utilizing their expertise and clinical knowledge based in the pharmacology and pharmacotherapy of drug therapies.  If the medication dispensing process is able to be optimized and reduce pharmacist workload, it will provide the profession appropriate opportunities to fulfill the current need for primary care services.

References:
1.  Schneider EC, Sarnak DO, Squires D, Shah A, Doty MM. The Commonwealth Fund. Mirror, mirror 2017: international comparison reflects flaws and opportunities for better U.S. health care. July 2017.
2. Tirrell M. CNBC.  Pharma execs would welcome Amazon into drug distribution, say the space is ‘ripe for disruption’.  https://www.cnbc.com/2017/11/01/pharma-ceos-welcome-amazon-to-disrupt-dr....  Published November 1, 2017.  Accessed November 21, 2017
3. Thomas K. The New York Times. CVS will offer next-day delivery of prescription drugs. https://www.nytimes.com/2017/11/06/health/cvs-delivery-prescriptions-ama.... Published November 6, 2017. Accessed November 21, 2017.
4.  Langreth R, Soper S. Bloomberg Technology. This is how amazon could invade the pharmacy business. https://www.bloomberg.com/news/articles/2017-11-07/six-ways-amazon-could.... Published November 8, 2017. Accessed November 21, 2017.
5.  United States Department of Labor. Bureau of Labor Statistics. Occupational employment and wages statistics, May 2016. https://www.bls.gov/oes/current/oes291051.htm#nat. Updated March 31, 2017. Accessed November 20, 2017.