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.

Take this "What does Amazon-PillPack Mean?" Quiz (in which nothing is clear) | NCPA Executive Update | July 13, 2018

by NCPA | Jul 13, 2018

Dear Colleague,

Doug Hoey

Much ink has been spilled in the past two weeks about Amazon's acquisition of adherence packaging mail order pharmacy PillPack. Depending on who you talk to (or read), the acquisition may not mean much at all, or it could be the end of the world as we know it.

Anytime Amazon makes a move into a new space, of course, it means something. They don't do anything cavalierly. But figuring out their intentions, their strategy, on the front end is often difficult.

If you think you've got it figured out, you would be in the minority. Opinions from financial and health care pundits range far and wide on the 'why' behind Amazon's move. This little midsummer multiple-choice quiz outlines a number of perfectly reasonable explanations for Amazon's latest acquisition and speculates about what it may mean (or not) for your pharmacy business.

1. Amazon's acquisition of PillPack is:

    a. A yawner. They bought a small mail order pharmacy, so what?

    b. More pre-emptive than strategic. They knew Walmart was interested in PillPack, so they snatched it up while they could and will figure out what to do with it later.

    c. A shrewd toe-in-the-water. PillPack is a small player, but their adherence packaging niche will only grow. Plus, PillPack has pharmacy licenses in all 50 states – capacity Amazon lacked.

    d. Step one in a broader – but still fuzzy – strategy to grab a considerable piece of the $560 billion prescription drug business.

    e. All – or none – of the above.

2. Amazon's acquisition of PillPack is confusing because:

    a. It's not particularly innovative. Mail order pharmacy has been around a long time, and its prescription volume market share has been on the decline.

    b. It does nothing to lower drug costs.

    c. It does nothing to change – or even challenge – the tyranny of the middlemen in driving up drug costs and limiting patient access to pharmacies.

    d. It's so subtle. It's a distribution channel, but a modest one.

    e. All – or none – of the above.

3. What does the acquisition of PillPack give Amazon strategically?

    a. Capacity. As mentioned above, PillPack is licensed in 50 states.

    b. A cash-pay platform, particularly for un- or under-insured patients.

    c. An opportunity to reinvent mail order pharmacy Amazon-style ... particularly for specialty drugs ... wherein may be the innovation.

    d. A regular opportunity for consumers to fill their online baskets with other items in addition to prescriptions to take market share from big retail chains and PBMs.

    e. All – or none – of the above.

4. Regardless of their actual strategy, Amazon's interest in health care – first enunciated last year:

    a. Is not to be under-estimated. When Amazon turns its pro-consumer focus to health care – whatever they have in mind – it will shake things up.

    b. Was impetus for the announced mergers in the past year, from CVS-Aetna to Cigna-ExpressScripts.

    c. May provide partnering opportunities for community pharmacies, especially in many rural areas where, even for Amazon, home delivery will be a challenge.

    d. All – or none – of the above.

5. Yeah, yeah, yeah...but what does it mean for my community pharmacy?

    a. Not much. Patients continue to patronize brick-and-mortar pharmacies, and given a choice, most patients don't prefer mail order prescriptions. The personal touch will always trump faceless corporations.

    b. In the near term, an opportunity to strengthen your patient relationships and to tout the valuable services you offer (and that you've probably offered for years) – from in-person consultation to 24/7 delivery.

    c. In the longer-term: uncertain. Amazon is a formidable competitor, but unlike with the PBMs, consumers actually can choose them.

    d. In the longer-term: An opportunity, in partnership, for reaching patients in underserved, rural areas.

    e. All – or none – of the above.

Like I said, lots of opinions, lots of speculation, and not much clarity, except that Amazon doesn't do anything small or shabbily.

We're not waiting to see. There may yet be a place for community pharmacy in Amazon's strategy. That's a possibility we're actively exploring. So stay tuned.

Best,
Doug Hoey