Amazon Shakes Up Health Care

Contact Sales@LeClairGroup.com with your questions or to request an appointment.


Amazon has driven innovation and competition across the retail industry from supermarkets to books. Now it’s gunning for pharmacies, which could force healthy changes across America’s sclerotic health-care system.

On Tuesday the retail and cloud-computing giant announced it is launching an online pharmacy that will deliver common medications, including insulin and asthma inhalers, with free two-day shipping for its Prime members. The move was facilitated by its purchase two years ago of PillPack, the online pharmacy startup that sorts, packages and delivers medication.

PillPack came with licenses to operate in 49 states, as well as technology and logistical infrastructure that Amazon has further developed. Amazon’s success in the highly regulated prescription drug market is by no means guaranteed. But its entrance has made muscular incumbents take notice and raise their game. CVS and Walgreens now offer fast and free prescription drug delivery.

Retail pharmacies have been also been adding services in their stores to increase value for customers. CVS has expanded its MinuteClinics that provide urgent care and is launching 1,500 HealthHUBs that offer screenings and blood tests for chronic conditions.

Walmart is launching health-care clinics that provide primary and dental care and psychiatric counseling with low out-of-pocket costs. Fees for primary-care visits are a flat $40. Customers can get lab services and medical imaging on site. Walgreens this summer also announced plans to attach 500 to 700 full-service doctors’ offices to its stores over the next five years.

Pharmacy clinics have been helping test and treat for Covid-19, and they will be even more important in rolling out vaccines. Their expansion is also providing competition for large hospital networks that have consolidated market share by acquiring physician practices and have contributed to higher health-care costs.

Clinics can provide less expensive care by employing physician assistants, nurse practitioners and even pharmacists to treat uncomplicated problems and chronic conditions. Medical cartels have tried to protect their turf, but one hope is that the combined might of the large pharmacies and Amazon can push state lawmakers to relax regulatory barriers to competition.

PillPack, for instance, has pushed changes in states that would let pharmacy technicians transfer medications from other pharmacies. Like other pharmacies, Amazon will have to negotiate with pharmaceutical benefit managers that set pharmacy reimbursements, drug formularies and out-of-pocket costs for insurance plans. But Amazon’s heft may reduce the market power of the large PBMs and could even create more transparency in drug prices.

It’s hard to predict how health-care markets will evolve in response to Amazon’s entrance, but increased competition will no doubt produce benefits for consumers. And while Amazon’s critics often complain about its size, its main competitors in health care aren’t exactly pipsqueaks.


This article originally appeared at wsj.com