Amazon/PillPack A Tough Swallow For Health Care?

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Amazon/PillPack A Tough Swallow For Health Care?

Posted on Aug 07, 2018 03:00 PM

Online behemoth Amazon has jumped into the pharmacy business, buying startup PillPack for about $1 billion, the company announced. If the deal is the death knell of traditional dispensing based community pharmacy, as some pundits predict, what will it leave in its wake?

How about a more vibrant, patient-focused pharmacy profession? That’s the hope, if not prediction, of at least one industry watcher asked to comment on the Amazon deal. But first, the details. Launched in 2013, PillPack distributes medication in easy-to-use packages, sorted by dose, with labels featuring images of each pill and directions for taking it. The company sorts and groups prescriptions by day and time of dose, and includes a label with a picture of each pill and directions on how it should be taken. With a primary pharmacy in Manchester, N.H., PillPack also has locations in Austin, Texas; Brooklyn, N.Y.; and Miami, and licenses to deliver drugs in all 50 states.

It’s a good fit for Amazon, Nathan Ray, the senior principal in the health care and life sciences practice for the consultancy West Monroe Partners, told Pharmacy Practice News. “The company is highly complementary to the Amazon ethos,” he said. “One of the biggest drivers of cost improvement in post-acute care is care management: having the right treatment, at the right time, in the right place (cost setting), which is more and more becoming in the home.

PillPack’s format adds ‘care management’ value by improving adherence and convenience, much like free shipping.” Amazon has been looking to make inroads into health care on several fronts. In January, it announced plans with Berkshire Hathaway and JPMorgan Chase to form an independent health care company for their U.S. employees. It’s also growing its medical supplies business.

Ed Monroe, the senior director of West Monroe’s life sciences industry practice, underscored the prevailing view: that the PillPack purchase will shake up the industry. “This acquisition will make the prescription drug delivery supply chain more efficient, given Amazon’s distribution, warehousing and packaging capabilities with same-day service,” he said. “In the medium term, I have no doubt Amazon will take cost out of this process; its track record is really strong.

Eventually, the acquisition will be disruptive to all players downstream of drug manufacturing, PBMs [pharmacy benefits managers], distributors and even retail.”

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