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What You Might Miss About The Future of Amazon’s Online Pharmacy

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Amazon is closing in its purchase of PillPack, so let’s explore why the acquisition happened and what it means for pharmacists.

PillPack is an online pharmacy that specializes in optimizing the patient’s experience with managing multiple medications. PillPack sorts the prescribed dosages by frequency and can combine multiple medications to the patient in a single package. In a scenario where a patient is prescribed to take multiple medications at various times throughout the day, PillPack would send the patient a sleeve of blister packages containing their prescribed medications. Instead of managing multiple dosing regimens of multiple medications, the patient only has to remember to take the doses at the time printed on the package.

Amazon primarily acquired PillPack so that they could have the same function as an online pharmacy.

The acquisition begs a grander question: What exactly are Amazon’s goals with PillPack? What is fascinating about PillPack is that it’s just another online pharmacy. Pillpack has a decent number of customers, but there’s nothing crazy about it. CVS and Walgreens said that in terms of just the number of patients that are affected it’s negligible, so it’s not a huge deal for the brick and mortar pharmacies themselves. What they’re not all admitting is the impact that the acquisition has. Amazon was having a hard time showing any kind of entry into the pharmacy world, and this acquisition of an online pharmacy changes that.

Past and Present

A few months ago, Amazon was struggling. They were originally trying to figure out if they were going to just supply medical devices. There even was some discussion of Amazon going all-in by starting a pharmacy in-house.  When Amazon gave up its pharma application license in Maine, it appeared that there would be a massive delay while Amazon re-evaluated its pharmacy push.

Instead of building a pharmacy from the ground up, Amazon decided instead to buy a company that had already developed through the startup phase. Amazon went to a 32-year-old with an online pharmacy and acquired PillPack right under the noses of Walmart, who was looking to acquire PillPack for about $700 million dollars. While Walmart was dragging its feet because of potential regulatory concerns, Amazon saw an opportunity and bought Pillpack to solidify its foothold in the pharmacy world.

Unfortunately for the pharmacy world, Amazon’s Pillpack acquisition caused Walgreens, CVS, and Rite Aid to lose 11 billion dollars due to investor concerns. Amazon’s intentions were strikingly unclear at this point. Is this a straightforward method to poach customers or is Amazon looking at a larger picture? As most providers could understand, Amazon needed an entry point, and PillPack was their solution.

The Future of Amazon

Amazon has done a great job in figuring out last mile delivery. In a product’s journey from warehouse shelf to customer doorstep, the “last mile” of delivery is the final step of the process where the package arrives at the buyer’s door. In addition to being a key to customer satisfaction, last mile delivery is both the most expensive and time-consuming part of the shipping process. Amazon is hoping to reduce these costs and improve delivery by offering people the opportunity to become a delivery provider. While offering this franchise opportunity enables Amazon to circumvent UPS and FedEx, it simultaneously addresses how it can enable patients to get medications without leaving the Amazon network.

Both Amazon’s purchase of PillPack and Amazon’s push to help start private delivery franchises are very much a shot across the bow of large pharmacy chains. CVS is decided to respond by offering to do home deliveries. Unfortunately, the CVS response comes across as reactionary instead of being proactive. Even though their announcement was made days before Amazon announced its desire to get into delivery services, CVS still appears to be motivated less by patient centricity and more by self-preservation.

From its current service offerings, Amazon comes pre-packaged with the ability to replicate the ability to appeal to impulse purchases. Pharmacies put greeting cards, candies, gums, and other impulse purchase items at the front of the store with the pharmacy at the back. The pharmacy aims for people to walk past impulse purchase triggers to get their prescriptions. Through practices similar to its current online store, Amazon could de-identify while collecting and analyzing patient data. They could contextualize this data in light of patient needs, and organize impulse purchases in response. This would enable the upselling of items, services, and maybe even medications to patients.

Your Role as a Pharmacist

The future of pharmacists will depend on the pharmacist’s ability to adapt. If pharmacists see themselves as gatekeepers of pill distribution, Amazon and its progeny will enable easier access to patients. For small pharmacy owners and pharmacists, focusing on the addition of a delivery service is likely to be an insufficient differentiator. I’ve previously discussed 4 ways pharmacists can survive Amazon’s post-PillPack pharmacy.

Last year, it was unclear whether Amazon would deliver to pharmacies and merely skip GPOs and PBMs. However, the recent Pillpack purchase confirmed that they hope to help patients skip pharmacies altogether and make Amazon their primary pharmacy.

GPOs and PBMs

This might also result in strange bedfellows. Pharmacists and PBMs have traditionally had an antagonistic relationship. However, Amazon may cause each to work with the other to survive.

GPOs could decide to purchase directly from Amazon and sell for cash instead of the current model where they go through distributors to be reimbursed by PBMs.

Accordingly, recent purchases and goals and a larger demonstration of vertical integration by larger pharmacy chains demonstrate a desire to adapt. This anxiety on the part of larger players may cause to either consolidate or decentralize. Decentralization would be beneficial to small pharmacy owners who are well distributed throughout the country. To avail of these pharmacies, PBMs may reinvigorate their relationships.

The delay that is inherent in a centralized distribution model will likely continue to plague Amazon. Laws limit the shipping of certain controlled substances, and the urgent need for certain pain medications and antibiotics may make mail order delivery unwieldy. So these may continue to be a source of revenue for some pharmacies. However, it is unlikely that a pharmacy could sustain itself just on emergency supplies.


Amazon’s acquisition of PillPack doesn’t change the demand for pharmacists. However, the impact on any individual pharmacy will depend on pharmacists themselves. In the short term, patients will be lured by the ease of use promised by Amazon. However, patient-specific information that answers “What happens to me?” is difficult to replicate and even more difficult to eliminate. Some pharmacists may even be able to capitalize on and maximize revenue from such opportunities.

If you are interested in hearing more about how Amazon affects pharmacists, the implications of an Amazon Pharmacy and patient centricity, or how Amazon’s Prime membership discounts might work with medications, search for the Pharmacy Podcast Network wherever you listen to your favorite podcasts.

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