A review of Amazon’s pharmacy site (1) is an interesting comedy as well as a task and test for US customer’s intelligence. My conjecture is that Amazon thinks that an average US customer should trust them and they can be taken for a ride, no questions asked. One would have expected that Amazon Pharmacy and PillPack (Amazon subsidiaries) will bring competition to the current landscape. However, based on the following analysis they, Amazon subsidiaries, are just a “me-too” pharmaceutical drug seller whose latent strategies are to increase their top and bottom line of the balance sheet. Neither presents a competitive scenario which will lower the average generic drug prices and let them be a competitive player. That raises a question of Amazon being successful in the pharmaceutical selling business on their fourth try. Earlier tries by Amazon to sell prescription drugs (2,3,4) did not work. Author has no financial interest or affiliation with any organization.
On Amazon’s site (1) prices of various drugs at different dosage and number of days are available. It lists retail and discounted prices. Copay prices are only available if one signs up. Two day shipments are only available to Amazon Prime members. One has to wonder the rationality of these numbers as no one pays retail and/or the discounted prices. Unless one signs up, they are not able to do comparison shopping and patients worry about the actual out of pocket prices. If citation of list and discounted prices is a selling point then it suggest that an average US patient is naïve about drug prices. No one, if they have any health insurance, will pay even the discounted price. With some exceptions Amazon Pharmacy discounted prices are significantly higher than what an average US citizen pays as they are part of a mutually subsidized healthcare system as illustrated in Table 1. For anyone to pay the retail price, they have to have a money tree in their yard.
It is not clear if the buyers will pay lower prices than what they pay today if they submit their personal healthcare information on Amazon sites. Without this indication one can assume that price would be very same or similar to patient’s current discounted price. For comparative prices buyer will have to submit their personal information and do substantial homework. This makes buying prescription drugs “an arduous task” and there is no transparency. While trying to get drug pricing after giving personal information, it is possible one can get rooked in buying their prescription drugs from Amazon Pharmacy or PillPack and have no advantage. Unless there is transparency I have doubts about Amazon and subsidiaries will make any inroads on the current landscape. If Amazon’s intent is to make inroads, they will fail miserably as their current offer without giving out significant personal information would not entice many to switch.
Current US prices are based on huge price differentials (5, 6) created by pharmacy benefits managers and others who import and sell drugs in USA. Table 1 lists selling prices of the same drugs in India. Most of the compared drugs are imported from India. Additional price comparisons are available (7). An alternate method to lower prescription drug prices to US customers is proposed (5).
Drug (# of tablets) | Amazon discounted price, $ | Copay price per tablet with current insurance, $ | Manufacturer’s sell price after profits, $/tablet | Price differential % |
Metformin hydrochloride, 500 mg. Tablets 90 (8) | 5.00 = 0.055/ tablet | 0.07 | 0.005 | 1,100 |
Atorvastatin, 10 mg. Tablets 90 (9) | 17.60 = 0.195/ tablet | 0.033 | $0.008 | 2,437 |
Ciprofloxacin, 500 mg. Tablets 30 (10) | 26.90 = 0.90/ tablet | 0.20 | $.032 | 2,812.5 |
Amazon and PillPack copay are available only after sign up | ||||
Table 1: Drug price comparison
If a patient needs any of their medicines the same day they will go to the nearest pharmacy that accepts their healthcare plan. They are not going to get any drug from Amazon or PillPack or any other mail order house as their delivery time is about 2-5 business days. To reduce the shipping time to two days, one has become an Amazon Prime member, an additional expense. This membership might lower the total sale price, a speculation, but each customer has to determine if that is worth the investment. On surface one can see that most of Amazon’s discounted prices are higher than the copay prices most pay. On PillPack website one cannot get any prices unless one signs their life away. As said earlier, unless personal information is shared, one cannot get real prices of prescription drugs from Amazon Pharmacy and PillPack and compare them to GoodRx (11) or their own pharmacy.
It is interesting that Amazon’s pharmacy website, unlike its regular merchandise website where comparative prices of goods are given does not do that. To get comparative prices, an inquiry was made at Amazon Pharmacy and asked the question about advantage over other pharmacies was asked to a customer service (CS) rep. Besides suggesting that Amazon delivers drugs at home CS rep. could not offer any other information. Others (11) do that so. Thus, there is no distinct advantage. When pressed to give comparative prices they could not give any drug price as they had to have the insurance information. This means Amazon or PillPack prices can only be obtained after a patient gives out personal insurance information. There is no guarantee that their drug would be lower priced than the drug from their current supplier. That is an expensive proposition as personal information is shared without any benefit to patient.
Unless Amazon or PillPack through examples can illustrate that their pricing beat the current pricing of the drugs under US’s mutually subsidized healthcare systems by 20-30% or more, it is going to be difficult for anyone to take the bait and switch to Amazon Pharmacy or PillPack. An average American patient is not naïve or gullible or can be taken for a ride.
Since Amazon has been and is trying hard to be a player in the generic prescription drug sales business and not succeeded using the current model of PBMs (pharmacy benefit managers) and others, it has to walk away from the model that is strangling the US population. It has to adopt strategies similar to its book selling strategies of 1994. Similar upheaval is needed in drug selling. Alternate strategies are needed. Amazon through combination of “nondestructive creation” (5, 12) and “creative destruction” (13) has the opportunity to cause a seismic perturbation.
Unless generic drug manufacturers can market directly to the patients (5) and compete, unlike today’s highest price of US’s current pharmaceutical drug dispensation model, nothing will change. Since the generic drug manufacturing is fragmented, it is time adopt “nondestructive creative” methods (5, 12) to innovate and consolidate to lower generic sale prices. Such a strategy will benefit patients and the seller companies through competition and manufacturing technology innovation.
To start direct marketing to US population Amazon could open its website open up to the manufacturers and they sell the needed drugs. They would directly offer FDA approved drugs through Amazon’s websites to the patients (5, 12). Given the opportunity the generic drug producer companies would compete for the market share through Amazon and its subsidiaries. Needed competition would ensue. It could also bring generic drug manufacturing back to USA (5, 12, 14). Such a strategy will benefit patients and the seller companies through competition and manufacturing technology innovation.
PBMs and their cohorts will throw every obstacle in Amazon’s path if the suggested route or anything similar is adopted. For success out of the box thinkers are needed.
Girish Malhotra. PE
President
EPCOT International
1. Amazon Pharmacy https://www.amazon.com/ref=pe_BE_PR_pe_EM_ACQ_842382001_22W30/b?node=23435487011
2. Ross, C: Amazon failed to disrupt the prescription drug business with Drugstore.com. Could a second try succeed? April 26, 2018 https://www.statnews.com/2018/04/26/amazon-drugstore-disrupt-prescription-business/ accessed July 29, 2022
3. Malhotra, Girish: Amazon PillPack Marriage can Alleviate Drug Shortages and May be Lower Drug Prices, Profitability through Simplicity July 5, 2018 Accessed July 28, 2022
4. Malhotra, Girish: Could Amazon (A), Berkshire Hathaway (B) and J.P. Morgan Chase (M) be the Anti-Ballistic Missile (ABM) needed to Control/Curb Rising Healthcare Costs? Profitability through Simplicity February 9, 2018, Accessed July 28, 2022
5. Malhotra, Girish: Has US lost its Business Acumen, Creativity and Imagination for its Healthcare Needs? Profitability through Simplicity, June 6, 2022 Accessed July 28, 2022
6. Malhotra, Girish: Systematic Demystification of Drug Price Mystique and the Needed Creative Destruction, Profitability through Simplicity October 15, 2019 Accessed July 28, 2022
7. Malhotra, Girish: Comparison of Drugs Prices: US vs. India; Their Manufacturing Costs & Opportunities to Improve Affordability, Profitability through Simplicity, January 18, 2018 Accessed July 28, 2022
8. Metformin hydrochloride, Amazon Pharmacy https://pharmacy.amazon.com/dp/B084BV1N87?keywords=metformin+hydrochloride&qid=1659047067&s=amazon-pharmacy&sr=1-1 Accessed July 28, 2022
9. Atorvastatin, Amazon Pharmacy https://pharmacy.amazon.com/dp/B084BW7STT?ref=sf_atorvastatin, Accessed July 28, 2022
10. Ciprofloxacin, Amazon Pharmacy https://pharmacy.amazon.com/dp/B084C2DXX1?keywords=ciprofloxacin&qid=1659033648&s=amazon-pharmacy&sr=1-1m, Accessed July 28, 2022
11. Good Rx - Prescription Prices, Coupons & Pharmacy Information https://bit.ly/3Qf3Tii Accessed July 28, 2022
12. Malhotra, Girish K.. Active Pharmaceutical Ingredient Manufacturing: Nondestructive Creation, Berlin, Boston: De Gruyter, 2022. https://doi.org/10.1515/9783110702842 Accessed July 28, 2022
13. Kopp, Carol M, Creative Destruction June 23, 2021, Accessed July 30, 2022
14. Malhotra, Girish: ONE PAGE Road Map to Reduce Drug Shortages, Assure Quality and Improve Affordability, Profitability through Simplicity, December 6, 2019 Accessed April 23, 2022
