Amazon buys PillPack, bringing online convenience to Rx purchases

pillpack photoPhoto © PillPack

Filling prescriptions online is one of those things that just seems like it should be a lot easier. It soon may be, now that Amazon is buying online pharmacy PillPack, a feisty start-up that supplies prescriptions in easy-to-use packages that help consumers make sure they’re taking the right dosages at the right time. The companies announced the deal yesterday.

“PillPack’s visionary team has a combination of deep pharmacy experience and a focus on technology,” says Jeff Wilke, Amazon CEO Worldwide Consumer. “PillPack is meaningfully improving its customers’ lives, and we want to help them continue making it easy for people to save time, simplify their lives, and feel healthier. We’re excited to see what we can do together on behalf of customers over time.”

For consumers who take multiple daily prescriptions, PillPack offers pre-sorted dose packaging, home delivery, and a commitment to customer service. The company said these features help customers take medications as prescribed, which has been shown to improve health outcomes and lower costs.

Brick-and-mortar drug stores

Brick-and-mortar pharmacies like CVS and Walgreens have continued to control the major share of the prescription marketplace for a number of reasons, including a patchwork quilt of state laws and the iron grip of pharmacy benefit managers (PBMs), the “middleman” companies that occupy the space between pharmacies and consumers.

PillPack, though relatively small, has already navigated all those hurdles and is licensed in all 50 states, offering Amazon a quick and easy entry into the online drug business.

While it’s now possible for consumers to get online pharmacy delivery, it usually requires at least an initial visit to a pharmacy to open an account and present insurance information. A Virginia consumer who recently wanted to switch his prescriptions from a neighborhood supermarket pharmacy to Costco found that he would first have to go to a Costco warehouse, get the prescriptions filled there, then switch to online delivery for the next batch, being careful to order well in advance.

“I guess it would have worked but it sounded like so much trouble that I just forgot about it,” the consumer, who asked that his name not be used, said.

Major side effects

Wall Street was quick to take note of the announcement. The news rocked the $560 billion prescription business and shares of major drug chains fell sharply. The health care industry has been keeping a careful eye on Amazon, wondering what its next foray would be.

In anticipation of Amazon’s entry, CVS recently bought Aetna and also began offering next-day drug delivery for a fee of $4.99. Cigna and Express Scripts, a PBM, merged, and other major companies made similar deals.

Amazon has several other health care ventures under way. It has established a medical supply service for hospitals and other institutions and, with Berkshire Hathaway and JPMorgan Chase has formed a health care venture serving the companies’ employees.

How it all shakes out is still uncertain but if Amazon does for prescriptions what it has done for countless other retail sectors, consumers could soon find yet another part of their life becoming much easier and, just maybe, a little more affordable.




About the Author

James R. Hood
James R. Hood is the editor and publisher of Rx411. He is a former Associated Press and United Press International executive and the founder of several prominent online sites including ConsumerAffairs and FairfaxNews.