Amazon is entering the pharmacy business with a new offering called Amazon Pharmacy, allowing customers in the United States to order prescription medications for home delivery, including free delivery for Amazon Prime members.
Amazon has been quietly building out its pharmacy offering for several years after ramping up internal discussions in 2017 and acquiring PillPack in 2018. The pharmacy space is notoriously complex and competitive in the U.S., and Amazon Pharmacy is built in part on PillPack’s infrastructure, including its pharmacy software, fulfillment centers, and relationships with health plans.
Amazon Pharmacy, announced on Tuesday, is Amazon’s biggest push yet into $300 billion market, and threatens the dominance of traditional pharmacies like CVS and Walgreens, as well as other large retailers that offer pharmacy services, including Walmart.
For Amazon, the announcement is well-timed. Americans are increasingly relying on getting their medicines via mail to avoid getting exposed to the coronavirus. That shift could be permanent, as more people than ever before are learning about new ways of receiving medication.
“We wanted to make it easy for people to get their medication, understand the cost and get it delivered to the home,” said TJ Parker, Amazon’s vice president of pharmacy, who previously co-founded PillPack. “The hard work is to make it easy... there were a number of complications behind the scenes.”
Customers over the age of 18 will have access to the pharmacy service this week in 45 states, not including Hawaii, Illinois, Kentucky, Louisiana and Minnesota. Amazon expects to serve those states over time.
Amazon Pharmacy will accept most forms of insurance, but could offer savings for people without insurance as well. Customers can also use flexible spending accounts or health savings accounts to buy prescriptions on the service.
Before customers order medication for the first time, the site might ask them questions such as whether they’re pregnant, their date of birth, and their gender as it was assigned at birth. That information is required by law to provide pharmacy care, and it helps pharmacists confirm prescriptions.
Doctors can send prescriptions directly to Amazon Pharmacy, or patients can request a transfer from an existing retailer, like CVS or Walgreens. Amazon says it has tools to verify that a physician legitimately ordered each prescription, and to tamp down on potential fraud.
Amazon Prime customers get free two-day delivery, although shipping might take up to five days the first time a customer orders, as it takes time to transfer a medication. Customers who don’t have Prime can get free delivery within five days, or they can pay $5.99 to upgrade to two-day delivery.
The medicines on offer include a mix of generic and brand-name drugs, but Amazon will not deliver Schedule II controlled medications, including most opioids. Amazon said it will screen for potentially problematic drug interactions for customers who are taking multiple medications at once.
Amazon has leveraged its rich troves of customer data to build advertising into a key pillar of its overall business, and shows customers personalized ads and offersdiscounts based on what they have bought in the past. But consumers are likely to have a different set of expectations when they’re placing a prescription order versus browsing for a new pair of pants.
“The information and experience you have inside the pharmacy is separate and distinct from the experience that you have on Amazon.com,” Parker said.
Amazon Prime members also have access to a pharmacy perk called the “prescription savings benefit,” which offers a discount of up to 80 percent on generic medications and up to 40 percent on brand-name prescriptions.
Prime customers can also get a prescription savings benefit card to use at up to 50,000 pharmacies, including CVS, Walmart, Rite Aid, and Walgreens. This might be preferable for customers who have an urgent need for medication and can’t wait two days for delivery.
Amazon’s Parker said the company does not currently have any brick-and-mortar pharmacies, and declined to speculate on future product offerings. But in future, the company could add pharmacies to Whole Foods and its chain of Amazon Fresh stores.