Amazon Pharmacy Puts Pressure on the Industry to Deliver Convenience

Amazon Pharmacy isn’t revolutionary, but it will put pressure on other pharmacies to provide home delivery and continue accepting prescription discount cards.

A new challenger has entered the ring: last month, Amazon announced the launch of their new pharmacy. While it’s thrown the media into a tizzy and has caused CVS and Walgreens stock to wobble, this announcement isn’t surprising. The pharmacy industry has been expecting this ever since Amazon acquired PillPack in 2017.

Nevertheless, there is reason for the pharmacy industry to be concerned about Amazon Pharmacy. Amazon has a pattern of crushing other retailers by offering quantity over quality and the appearance of greater convenience. The situation is a little different with pharmacies; they have the potential to offer faster delivery and better service for a lower price than Amazon can. But it is up to each pharmacy owner or chain to keep patients coming back.

We don’t have all the answers, but we do believe that offering same-day and on-demand delivery with ScriptDrop can help a pharmacy stand out from the crowd. With a user-friendly platform, our exemplary Customer Success team, and a nationwide courier network, we can help pharmacies stand their ground.

Because here’s the thing: patients with existing Amazon Prime memberships may unthinkingly switch to Amazon Pharmacy. In their pursuit of convenience, they may not think about the patient services that pharmacies provide (as outlined in our recent white paper). Patients will undoubtedly return to their local pharmacy for the COVID-19 vaccine, but if those same patients switch all their medications to Amazon, will their community pharmacy even exist?

The call to action is clear: pharmacies need to differentiate themselves from Amazon. To understand how, let’s consider what Amazon Pharmacy is actually offering:

  • Convenience through an online platform and shipping
  • Reduced prices through “Prime Rx,” a prescription discount program administered by Inside Rx

The appearance of convenience

As we examined in our industry report earlier this year, prescription delivery became a big deal as soon as COVID-19 began to spread across the globe. Online pharmacies, all of which use ground shipping to send medications to patients, exploded in popularity. The fact that Amazon has jumped on the online bandwagon is further evidence that delivery is here to stay. That’s further motivation for brick-and-mortar pharmacies to expand their delivery efforts, too.

As ScriptDrop knows very well, pharmacies all over the country offer shipping and many other conveniences. But patients may not be aware of these services, and Amazon is betting on that. One Business Insider reporter experimented with Amazon’s pharmacy platform and received two different delivery estimates for their order: either five days or nine days. Neither estimate is particularly enticing. Even the most diligent patient might occasionally forget to request a refill a week in advance.

In their FAQs, Amazon suggests using your local pharmacy for any “urgently needed medications” or “medications you’ll run out of this week.” They know that local pharmacies with same-day and on-demand shipping can handle these acute needs easily. But patients in the habit of shopping online might be okay with relinquishing control to Amazon. While forgoing their prescription for a day or two could be injurious to their health, some people may still choose to wait for their prescription package instead of going to the neighborhood pharmacy.

The appearance of savings

If you haven’t read our blog on prescription discount cards, here’s a quick refresher. When a patient uses a discount card, the pharmacy processes their prescription using the discount card information rather than the patient’s insurance information. This usually results in a lower price, which the patient then pays out of pocket. Discount cards have become popular in recent years, especially with uninsured or under-insured patients.

Generally, discount cards are available for free to anyone – but not Amazon’s Prime Rx program. The discount program is only for Prime members and one other adult in the Prime member’s “Amazon household.” If a person cancels their Prime membership, they can no longer use the program.

Since discount cards require patients to pay out of pocket, it usually doesn’t matter what kind of insurance you have. Prime Rx does have some restrictions, however; savings on certain brand-name medications are not available to people with state or federal insurance. This is because those savings are provided by the drug manufacturers themselves. Anti-kickback laws prohibit manufacturers from offering any kind of subsidy to beneficiaries of federal healthcare programs.

Discount cards are usually accepted at many pharmacies, and the same goes for Prime Rx. The card can be used at most chain pharmacies. However, Amazon Pharmacy does not accept any other discount card or program. Either pay up for Prime Rx or pay your copay price.

Clearly, Prime Rx isn’t a great discount program. But patients who are unfamiliar with discount cards may take Amazon at their word and assume they’re getting the best price on their medications.

What else we know about Amazon Pharmacy

Is Amazon Pharmacy available in my state?

Yes, unless you live in Hawaii, Illinois, Kentucky, Louisiana, or Minnesota. The pharmacy is not available for those states yet.

How much does shipping cost?

The Amazon answer: it’s free. The real answer: Prime members pay either $119 a year or $12.99 a month for their membership to get “free” 2-day shipping. Non-Prime customers either get free 5-day shipping or can upgrade to 2-day shipping for an extra $5.99 per shipment.

The cost-effectiveness of a Prime membership really depends on how much you use it. If you only intend to use Amazon Pharmacy and only get one shipment per month, your Prime price for shipping would be about $10 each time.

I’m a parent or caregiver. Can I order medications for my dependents?

No. You can only purchase prescriptions for yourself at this time.

Can I order all of my medications through Amazon Pharmacy?

No. They cannot ship any of the following:

  • Compounded medications
  • Diabetic testing and administration supplies (e.g. test strips, glucose meters, and pen needles)
  • REMS medications
  • Schedule II controlled medications
  • Specialty medications
  • Suspensions (e.g. liquid amoxicillin or fluconazole)
  • Vitamins and over-the-counter (OTC) items.

Note that if you simultaneously use a local pharmacy and Amazon Pharmacy, neither of them will have visibility into the actions of the other. This could lead to potentially dangerous drug interactions or duplications.

Can I order medications like insulin that need to be kept cold?

Yes. Any prescriptions that require refrigeration will be shipped separately in special packaging.

Refills are automatic, right?

Not at this time. Amazon Pharmacy will notify patients when it’s time for a refill, but patients will need to manually request those refills. 90-day fills are also not available, so you’ll need to stay on top of your refills.

What we don’t yet know about Amazon Pharmacy

How long will it take to get my prescription?

This seems to depend on a number of factors.

  • Up to five days for prescription to be transferred from your local pharmacy to Amazon pharmacy
  • An unclear amount of time for Amazon pharmacists to validate your prescription
  • Up to six business days for prior authorizations to be completed, if applicable
  • 2 days or more for Prime shipping
  • 5 days or more for non-Prime shipping, unless customers choose to upgrade to 2-day shipping

We would wager that, realistically, your first prescriptions would arrive from Amazon Pharmacy in one or two weeks. Once your prescription is on file, the process should be faster.

How much will I save on prescriptions?

That depends: are you a) a Prime member and b) willing to forgo your insurance and buy your medications out of pocket? In some cases, prices through Amazon’s “Prime Rx” savings program will be lower than your copay.

Who is actually filling and dispensing my prescription?

This is unclear. Amazon says, “Your prescription may be processed and medication order filled at any licensed pharmacy in our network... including third-party licensed pharmacies. The dispensing pharmacy will always be identified on the prescription label.” We weren’t able to track down any information about Amazon’s pharmacy network.

Last thoughts on Amazon Pharmacy

In Amazon’s press release, TJ Parker, Vice President of Amazon Pharmacy, implies that Amazon is revolutionizing the pharmacy industry. Based on what we know, that simply isn’t true. Yet patients can be easily swayed by the appearance of convenience and discounts, especially if shopping on Amazon has become a knee-jerk reaction.

Nevertheless, it is possible to compete against Amazon. If you own or are affiliated with a pharmacy, consider delivery with ScriptDrop. We work with community pharmacies, health systems, and major chains and can adjust to your needs. Reach out to us today and learn how we can help you stay ahead of the crowd.