Amazon PillPack Marriage can Alleviate Drug Shortages and May be Lower Drug Prices

FDA has been publishing drug shortage lists and it seems that no one is taking up the challenge to alleviate them. Reasons for the shortages have been discussed ⁽¹⁾. I am sure there are additional. Week of June 28, 2018 a minor earthquake which could become a major disturbance to the drug pricing and supply chain happened. Amazon is buying PillPack ⁽²⁾. This has caused some concern on the pharma landscape. Actually Pharma companies and PBMs should be really concerned in conjunction with Amazon, Berkshire Hathaway and JP Morgan (ABM) alliance announced in January 2018 ⁽³⁾. I see this a tremendous opportunity for Amazon to alleviate drug shortages and improve drug affordability ⁽⁴⁾. 

While the process of PillPack assimilation is going on, Amazon can directly contact the companies who can produce drugs on the shortage list directly, whet them and start supplying the drugs. This will upset the PBMs applecart. PBMs could use their political clout to threaten Amazon. However, PBMs might have to swallow a bitter pill. Amazon could extend the relationship to generic drug suppliers and lower overall drug prices. 

I believe pieces parts to alleviate drug shortages and improve drug affordability are being put in place. Pace might have to be hastened. Political entities, regulatory bodies and hospitals will be and should rooting for their success. 

Girish Malhotra, PE

EPCOT International

1. Koons, Cynthia, Why We May Lose Generic Drugs, Bloomberg Businessweek, April 11, 2018, accessed April 18, 2018
2.  Amazon Buys Online Pharmacy PillPack for $1 Billion, WSJ.com, Accessed July 5, 2018

3. Triple Threat: Amazon, Berkshire, JPMorgan Rattle Health-Care Firms, The Wall Street Journal,  January 30, 2018, Accessed January 31, 2018
4. Malhotra, Girish: Improving Drug Affordability for the United States Populous through Alternate Business Models, Profitability through Simplicity, May 4, 2018