Amazon and Walmart move to enter the Prescription drug market

What is Amazon Pharmacy?

Amazon Pharmacy is a prescription service from Amazon with delivery of medication to customers. This comes after multiple efforts by Amazon on how to enter the highly valuable prescription drug industry. One step Amazon has already taken is acquiring digital pharmacy PillPack back in 2018 for $750 million. This purchase had a huge influence on the market, worrying PBM’s, or pharmacy benefit managers such as OptumRx, CVS Caremark, and Express Scripts, which control ~85% of the US market. Amazon pharmacy allows users to search for generic or branded medications and has detailed price comparisons for the cheapest purchase. Amazon Pharmacy’s business plan is centered around Amazon buying medication at a bulk discount from the manufacturer and then making biyearly deliveries to the customer. As said by Amazon Pharmacy VP TJ Parker, “[Amazon] want[s] to make filling a prescription just as easy as shopping on Amazon.” This all comes with Amazon’s newest offer of six-month prescriptions starting at $6 for common medications and prescriptions. Additionally, Amazon may use its 350+ Whole Foods locations to open up physical pharmacies in the future.

What is Walmart doing?

Walmart announced recently that it would be adding new discounts of up to 85% on prescription drugs purchased through its own pharmacy service, Walmart+ RX. Continuing the trend of supercompanies entering the prescription drug market, Walmart has also taken steps in the past, with an existing infrastructure and a significant number of pharmacies. Walmart’s strategy is to use prescription drug cards issued by them to be applied for by customers. This “savings card” allows customers to use the money on prescription drugs at Walmart stores and the website. 

What does this mean for healthcare?

As both of these superpower companies enter the waters with their highly publicized discount offers, the existing industry is feeling major shockwaves. This threatens existing pharmacies such as CVS and Walgreens which currently dominate the revenue rankings. Until Amazon, Walmart, or another company have a novel approach to prescription drugs, or significantly lower prices, these drug titans will likely remain unchanged.


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