This Is How Amazon Could Invade the Pharmacy Business | Hacker News Reader

This Is How Amazon Could Invade the Pharmacy Business

bloomberg.com

76 pointsmatco1145 comments

I already have to worry about counterfeit electronics when ordering from Amazon. I’m not sure I’d trust them with prescriptions.

The barrier of entry to pharmaceutical sales is a bit higher than electronics.

It shouldn't be, dodgy appliances can get you seriously injured or even killed. [1]

[1] http://www.scmp.com/news/china/article/1283818/woman-electro...

You can't be serious.

Drugs differing by a couple thousands of a gram (mg) can severely harm or kill someone. There are some drugs measured in micrograms. And that speaks nothing of potential contaminates and cross-contamination. There's also no serious black market for theft and addictive abuse of electronics. (Not one that compares in the order-of-magnitude to the amount of drugs abused every day.)

You can say electronics should be more regulated. You can't argue (without much more talking points) that electronics are as deadly or dangerous as drugs... things you put inside your body.

And if you bring up medical electronics... we're right back to the same strict regulation that drugs have. So we don't even necessarily need more regulation of them.

Also, with expensive drugs I would worry that counterfeits could be introduced within Amazon‘s warehouses by workers, or within the postal system. Open a package, extract the original, and put the counterfeit in. For drugs that are worth hundreds of dollars per package, why not?

I expect pharmacies to double check everything they buy, and I somehow doubt Amazon will be able to ensure safety when the package is handled by 10 different people. If they develop some kind of (digital?) package seal, I might change my mind. Or every pill container has an RFID chip and is verifiable with the supplier‘s public certificate.

IIRC in The Everything Store, Stone recalled how Jewellery was a struggle because of its high value to weight ratio. Pharmaceuticals will probably be a similar problem, but I'm sure Amazon will have a process built in to manage for this if they chose to move into the area

Of course. People assuming that they'd toss drugs in with their random goods are not even trying to comprehend this business move.

They bought World Foods. They didn't start storing week old bread on their shelves.

The pharmacy division would be a completely separate process subject to all the additional _legal_ requirements all the other pharmacies adhere to. They're not going to just have buckets of Percocet lying around on shelves for anyone to access.

it would be difficult, every state has different requirements and they'd have to have a pharmacist licensed in every state to fill the rx. What they'd probably do is buy up a central fill facility in every state and hope the pharmacists who work there choose to stay (pharmacists are in short supply). Also, i'm not sure how they'd handle scheduled prescriptions ( like oxy ). At least in Texas those have to be reported to the state and e-prescribing is difficult so most patients end up with a physical scheduled rx that can't be scanned/faxed in, the pharmacist has to collect the original.

They would have to operate a pharmacy, they won't just dump expensive drugs into their fulfillment system.

You'd hope.

No, I still have sufficient faith in the regulatory apparatus in the US.

Especially for something where the businesses have set the regulator up as a gatekeeper.

I am not a big fan of the shoes, but I am a fan of Nike socks and underwear.

I am not worried about fakes from less famous brands, but I would not buy any Nike products from Amazon; I get them at local retailers, Nike's online store, or Niketown if I am visiting a big city.

i just want to highlight a few scenarios to allay your gripe.

Not all deliveries come from the warehouse; think of liaise scenarios with dispensaries eg https://www.amazon.com/restaurants

Also having a special section for pharma products staffed with licensed chemists and thoroughly vetted delivery staff shouldn't be beyond amazon.

There are other vectors of implementation I dont think authentication would be a problem

Too many are on prescriptions unnecessarily. If they would change what, and how much they eat, they can likely get off the pills. Food is the best prescription.

This is an irresponsible comment.

Agreed with this.

I have a lot of problems with the pharma industry, but I'm not going to chance it with counterfeit medication just because I might save a few bucks. When I get something that's a counterfeit electronic off of Amazon - no harm, no foul, for the most part. Their customer support just refunds me the money and I can send it back. Can't really do the same with medication that might kill me.

I absolutely wouldn't trust Amazon with prescriptions. We couldn't even trust them with eclipse glasses.

https://www.pbs.org/newshour/science/amazon-recalls-potentia...

There are lot of stories going around on this, all of which are based on the client note by Leerink’s Ana Gupte which was released on Friday, setting cat among the pharma industry pigeons:

http://www.barrons.com/articles/amazon-pharmacy-could-make-w...

This article re-packages all the points from the client note like shipping, generics, B&M stores etc without even attributing to the original report.

It should be easy for Amazon to start delivering my meds: Convince my employer. Right now, I walk two blocks to Target for new prescriptions, and I'm required to buy any refills from Express Scripts. My clinic also has a pharmacy on site that I could use. I'm betting that refills (i.e., stuff that's taken chronically) is the bulk of the prescription drug business, but it would be interesting to know if that's true or not. I don't see much fat to trim.

"I don't see much fat to trim."

Well, the obvious one is that Express Scripts probably isn't already sending you a package of other stuff every week or so to which a bottle of pills could be added at little or no increased cost, nor do they likely have the clout with shippers that Amazon does.

Yeah, not everyone gets an Amazon package every week, but enough people do that it's going to add up.

How many people get weekly refills? I️ thought monthly would be a lot more efficient and common?

Express Scripts pushes 90 day supply as long as insurance allows it, I assume for this reason.

That's not the point. It doesn't have to be weekly, or even monthly. Whatever the frequency is, Amazon is somewhat likely to already have a package headed to the customer within that interval (much more likely that a dedicated prescription store, certainly).

The advantage is actually greater with less-frequent refills, as the probability of having another package they can piggyback on within an acceptable window becomes higher the less frequent the refills are.

I suspect Amazon isn't overly concerned with trimming the fat in this case (Walmart took out a lot of what was left of that when they entered the business). At break-even in pharmacy, while not trimming so much as a dollar of fat, Amazon benefits big. Here's how:

- Increased shipping volume. This adds to their market leverage and it can bolster their own logistics business over time. Anything Amazon can do at scale, while at least breaking even, is a very big benefit to their flywheel.

- Another entry into the home, into a person's life. And in this case, a far more important one than most purchases. If Amazon can sell a 67 year old a prescription and get into her home, they're no doubt betting they can also sell her an artificial intelligence tool in the coming years (maybe it takes three years of advertising the Echo on the side of the prescription delivery box to convince the customer).

- It becomes a very sticky repeat business. People will stay with those so long as you don't treat them horrendously. That buys Amazon time to figure out new ways to make money in the segment. It may also be a long-term play on the fact that the US is guaranteed to increasingly shift to government healthcare, as the ACA or equivalent walks its way up the income ladder by necessity; Amazon may see an angle in that.

- Walmart is finally becoming a serious online competitor. They're growing at 2x the rate of Amazon, with about 1/3 the online retail sales. Walmart's online business appears to be kicking into another gear. They've got a $20 billion per year pharmacy sales business. Then there are obviously the other far larger pharmacy-centric giants (the big three have ~72% of the pharmacy business). Anything Amazon can do to press them all in that segment, is a win competitively. To grow at this point, Amazon has to take from everyone else, as US consumer spending is expanding relatively slowly.

I would love to see Walmarts online growth split apart from the acquisition of Jet. Chance's are they are riding the coattail of that acquisition and once that drys up the only thing left is to spend a ton of money on customer acquisition to fuel "growth". Having both used Amazon and Jet, I find that Amazons customer support and checkout experience is significantly better then Jets.

Totally agree with what you said. I'd like to add that another part of the break-even game is that often all it takes is for your competitor to take one step in the wrong direction, for you to become profitable.

When Blockbuster (for example) took on streaming to compete with Netflix, not only were they far too late, but they also charged a fee for movies. People didn't bother because Netflix had unlimited streaming. They also had a poor catalog if I recall correctly. Too many mistakes.

don't forget the Blockbuster streaming deal involved ( a may have been originated by ) Enron of all things. It never had a chance in hell.

Remember that Amazon loves low-margin businesses. You might not see much fat to trim, but I'm sure Amazon can save a few cents here and there.

I think that the Whole Foods acquisition now gives Amazon a physical footprint to compete with CVS, Rite-Aid, etc. Imagine ordering online and picking it up at a Whole Foods. After this step, they will find ways to fully by-pass the physical store and ship you medicine directly via Prime. There is a lot of money in the pharmacy business and a lot of opportunities for Amazon to enter this market and disrupt it. I don't think that any of the incumbents have the technological capabilities to compete with Amazon's supply chain. The question is not if they will enter. The question is how and how fast.

To put it into context, Whole Foods has less than 500 stores, compared to 8200 and 9600 for Walgreens and CVS.

Whole Foods also doesn't currently have a pharmacy, unlike many other grocery chains.

Ok, so this is what a winner-takes-all game looks like, and it is getting pretty boring. Can we now play a different game, please?

We can start by turning Amazon into a utility.

But then it would turn into a slow government entity, all the talent will leave, and our economy would lose a great innovator.

> But then it would turn into a slow government entity

Public utilities are not necessarily government entities; they can be privately owned.

> all the talent will leave, and our economy would lose a great innovator

That talent could work at universities again, so everybody would benefit more evenly from innovation.

Public utilities are not necessarily government entities; they can be privately owned.

Like Bell, who had to be sued to allow people to use modems and fax machines?

At least the law was on our side.

Try suing Amazon for a similar cause.

I don't need to - I can not use them.

I know the ex-CEO of a generic pharmaceutical firm. Drugs that are wholesaled at $100 are discounted by the firm to around $25$.

There is much profit for Amazon to harvest.

I worked at a distributor throughout college and the week a drug went generic was party time. The company would ship more of a recently genericized drug in that week than they had until that point. Dropping to ~25% the original price is the average but sometimes it would be 10% or less.

Looking forward to having my adderall delivered by drone.

heh i take vyvanse and have to burn a morning once a month to get my refill. It's so infuriating i wrote a telemed system based on webrtc and am selling it to my doctor so i can see my NP and get my rx snail mailed to me without leaving the office.

Is Amazon going to attempt to tackle the healthcare insurance market? CVS and Walgreens may have started in that direction, but they rely on EHRs to get them the industry knowledge they lack. I'm not sure if Amazon would do the same. That opens patients up to some crazy HIPPA scenarios when Amazon decides to collect your prescribing visit info to send to the insurance company.

I think the brick and mortar pharmacy business is already being cut out by placing like Optum and express scripts.

They ought to buy Pillpack.

Negotiating that legal framework is going to be challenging

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