As Amazon continues to trim head count by around 18,000 amid an economic downturn, the massive marketplace continues to roll out new products.
On Tuesday, the e-commerce giant introduced RxPass, an add-on to Amazon Pharmacy that allows Prime members to have multiple prescription medications delivered to their doorsteps for a $5 monthly subscription fee. Prime subscribers can tack on the $5 charge to their existing Prime membership by visiting the Amazon Pharmacy website.
Notably, RxPass does not apply to Medicare or Medicaid members. It also does not allow payment via health insurance, such as through a health savings account or flexible spending account, which eliminates deductions and copays. However, patients can pay with those methods when using other Amazon (NASDAQ: AMZN) health care services.
Currently, 52 medications treating more than 80 common health conditions, including bupropion for depression and omeprazole for acid reflux, are eligible for delivery to customers in most U.S. states via the service.
Dr. Vin Gupta, chief medical officer for Amazon Pharmacy, estimated that around 150 million Americans take at least one of the medications available on the platform.
“Over the last decade as a practicing pulmonologist, I have seen patients with chronic diseases struggle to get access to the basic medications they need to live their lives well,” Gupta wrote in a blog post Tuesday. “Navigating insurance can be a maze and getting to the pharmacy a burden. Sometimes that has led to poor outcomes: New medications don’t get filled, refills don’t get picked up, and patients suffer. Aspects of our health care system make what should be easy, difficult.”
Customers who subscribe to RxPass will undergo a short sign-up process that allows Amazon to verify their eligibility and prescription information. The service will also include round-the-clock assistance from Amazon pharmacists and support staff who can manage medications or coordinate directly with a patient’s doctor.
After completing the sign-up process, customers can add any number of eligible medications to their RxPass list and get them delivered either monthly or quarterly for that flat $5 fee.
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The launch of RxPass follows the recent demise of Amazon Care, the company’s first iteration of a telehealth service, and the launch of its replacement, Amazon Clinic. The moves come after the marketplace’s July acquisition of One Medical for close to $4 billion, which to some observers signaled a push to move further into the health care space.
So far, analysts are mixed on RxPass’s prospects within the competitive pharmaceutical space, which also includes longtime players like CVS and Walgreens and newer ones like Walmart.
Some, like JMP Securities analyst Nick Jones, believe the service could help Amazon attract new Prime members and open up cross-selling opportunities for pharmacy services. Other observers see the move as essential to making Amazon a major player in the pharmacy space.
“Low-cost generics are now the price of entry for any pharmacy player entering the space,” said Columbia University health policy professor Meghan Fitzgerald. “The breadth of formulary coverage, customer service and additional services (telehealth) will be important to differentiation and ultimately winning market share.”
But Nephron analyst Eric Percher noted that payoff may not be worth the effort forAmazon, considering the array of other options customers have for affordable prescription delivery.
“While it is possible that the $5 price point could offer savings for uninsured and underinsured patients who take multiple (generic) prescriptions, we do not believe it is significantly lower than that available from community and mail pharmacies, especially after taking into account the cost of a Prime membership,” Percher said.
Evercore, meanwhile, called RxPass an “incremental pharmacy experiment” for Amazon, and analysts shared bearish notes on the company’s prospects in the space.
“Overall, we continue to see Amazon as a relatively small player in pharmacy over the short-to-medium term as innovation is much harder for branded drugs,” Evercore analysts said.
Though some analysts and other observers are skeptical of Amazon’s latest health care offering, there’s some good news for the firm. Prescription delivery is considered to be a very competitive industry, with the shadow of COVID-19 and the rise of e-commerce expected to fuel significant growth through 2030.
So, if Amazon can find its niche in prescription delivery, it may also have found a winner.
Click for more FreightWaves articles by Jack Daleo.
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