NCPA Executive Update

NCPA Executive Update delivers insights on legislative, regulatory, policy, and industry developments from NCPA CEO B. Douglas Hoey, Pharmacist, MBA, to NCPA members and pharmacy leaders every Friday.

Make Sure You’re Ready If Amazon Makes Its Pharmacy Move | NCPA Executive Update | November 3, 2017

by NCPA | Nov 03, 2017

Dear Colleague,

Doug Hoey

On Wednesday, Amazon announced that its "Countdown to Black Friday" has begun. (Halloween was Tuesday, so Christmas must be just around the corner, I guess). Each day there will be a "deal" on featured merchandise. Speculation is rising that next year's featured merchandise could include items like an asthma inhaler, glucose strips, or cancer treatment medications.

Amazon's strongly rumored interest – they still have not confirmed it – in the pharmacy space is driving a lot of speculation in the pharmacy world. Fanning the flames even higher was last week's St. Louis Post-Dispatch report that Amazon has received approval for wholesale pharmacy licenses in at least 12 states, including Nevada, Arizona, North Dakota, Louisiana, Alabama, New Jersey, Michigan, Connecticut, Idaho, New Hampshire, Oregon, and Tennessee. Some of those wholesale licenses were for medical equipment.

CVS Health is rumored to have taken a proactive action to defend itself from an Amazon entry into pharmacy by allegedly pursuing Aetna. Neither company has confirmed the story first reported last week in the Wall Street Journal that CVS is seeking to acquire Aetna for $66 billion. Among other things, the deal would potentially allow CVS to lock in Aetna's PBM business, which accounted for 11.2 percent of CVS revenue in 2016. Should the rumors be true and the deal is approved by regulators, we would hope a merged company would allow patients to exercise freedom to equitably choose their physicians and pharmacies, something that some of Aetna's Part D plans do not allow.

As I mentioned, neither company has confirmed the rumors and, in fact, on Aetna's third-quarter earnings call this week, company officials went out of their way to say they would not comment on any unconfirmed rumors. But if the Wall Street Journal report is true, it's just one more sign of radical changes taking place in the pharmacy space.

In May, I wrote about the impact Amazon could have if it came into pharmacy ("Amazon – Community Pharmacy Friend or Foe?"). Not a lot of details about Amazon's intentions have become clear since then. The rumors persist that they could be getting into the PBM business, wholesaler space, mail order pharmacy, and/or sale of medical equipment.

Part of the strategy for independent community pharmacy owners to compete is to focus on what it does that Amazon could not do, and current competitors can't or don't do. Despite decades of cajoling and coercing, consumers still don't prefer getting their prescription drugs through the mail. Medications are more personal than, say, a portable garment steamer or a swiveling head digital meat thermometer (actual "deals" from yesterday!). Not to mention the risk of diversion, potentially compromising efficacy due to exposure to heat and cold exceeding pharmaceutical manufacturer recommendations, and waste. NCPA continues to keep a repository of the photographs you send us with boxes of prescription medications patients have asked their local pharmacist to help them destroy. Send us your "Waste Not Want Not" examples to– and make sure you delete any identifying information so you don't violate HIPAA rules.

Some of community pharmacy's greatest assets are the enhanced services it provides patients that result in lower health care costs and better quality. CPESN℠ USA is a solution that aggregates pharmacists providing enhanced services — many of which they are already providing — into local networks. If you are already part of a local network, this is an opportunity to provide a service that others can't or don't provide. If you aren't involved with CPESN℠, investigate if it is an option for your pharmacy.

Others in the industry may take defensive steps if and when Amazon enters the pharmacy space. For community pharmacy, doubling down on aggregated clinically integrated services of value to payers is a move you can make today.

Doug Hoey