Testing Amazon Pharmacy – Amazon’s foray into healthcare includes COVID-19 testing, the Halo health band and service, cloud services for healthcare and life sciences, and even primary care for its employees.
The sheer size of the healthcare market and the massive problems to be solved is a major motivator for the company.
“Amazon is a big company now, and they still have big growth ambitions, so they need to tackle big markets,” said John Rossman, a former Amazon business leader and author of The Amazon Way, on a recent episode of TechNews Day 2 podcast. “From every angle, healthcare is going to become a bigger and bigger component of what their strategy is going to be.”
However, one of Amazon’s healthcare initiatives appears to be particularly well-positioned to benefit from the company’s traditional e-commerce expertise: prescriptions by mail. The company will launch its Amazon Pharmacy in November 2020, following the acquisition of PillPack in 2018.
“Really, we wanted to make a pharmacy experience that was as simple to use as Amazon in general,” said TJ Parker, PillPack’s CEO and vice president in charge of Amazon Pharmacy, who is also a former practising pharmacist. [Testing Amazon Pharmacy]
Amazon competes with traditional pharmacies like CVS, Walgreens, and RiteAid, as well as big retail rivals like Walmart and Target, and healthcare technology companies like GoodRx, whose chief financial officer, Karsten Voermann, attempted to downplay Amazon’s competitive threat on a recent earnings call.
“They have not been successful based on third-party data,” Voermann said of Amazon. “In the United States, mail-order prescriptions account for only about 5% of total fills… According to third-party data, Amazon Pharmacy is not gaining traction and their volume remains incredibly small.”
But this is Amazon, a company with the resources and tenacity to pursue large challenges and opportunities over a long period of time.
So, how does it feel to use Amazon Pharmacy?
To find out, I enrolled in the service for a routine prescription refill. Amazon Pharmacy wowed me with its ease of use and privacy. However, I encountered obstacles, some of which were caused by kinks in the healthcare system beyond Amazon’s control, that made the overall experience less than seamless. [Testing Amazon Pharmacy]
- In this episode of TechNews Health Tech Podcast, I speak with Amazon’s TJ Parker about the Amazon Pharmacy, drawing on my own experience.
- First, the positive aspects of Amazon Pharmacy as I experienced them.
- I was able to quickly set myself up in Amazon Pharmacy using my existing Amazon account, with no need to re-enter credit cards or mailing addresses.
- The familiar Amazon interface was easy to navigate but also appropriately streamlined, with no ads or other promotional staples of e-commerce.
- After entering my prescriptions, I was able to read plain-language descriptions, which provided me with a better understanding of the medication I’ve been taking; and
- The system displayed the out-of-pocket costs with my insurance co-payment or with a special Prime member discount, allowing me to choose. My insurance co-payment was lower in my case, but Amazon’s Parker claims that the Prime discount is often lower than people expect. Amazon’s team handled the entire process, contacting my doctor and local pharmacy to obtain permission to refill the prescription and ship it to my home.
What a pleasant modern health-care experience! No, not quite. [Testing Amazon Pharmacy]
- My insurance account was initially unable to be verified by Amazon’s system, necessitating a phone call to the insurance company, where I discovered that I had omitted the secret extra zeroes that were not printed on my insurance card. (I had no way of knowing this as the customer.)
- Something went wrong in Amazon’s communication with my doctor, or in my doctor’s understanding of what was going on, because a second refill request was sent to my regular pharmacy a week after I placed the order with Amazon. It was initially denied, but it was later approved, and I had to call the pharmacy to cancel it.
- Instead of the two days promised to Prime members, it took UPS five days to deliver the medication from Amazon’s Phoenix hub to my Seattle home. According to an Amazon representative, this appears to be an error in how my Prime status was applied to the order, and to contact customer support if the delivery date does not meet expectations.
- And when the package with my prescription finally arrived, my wife promptly opened it, destroying any illusion of privacy. (I don’t have anything to hide!)
She wasn’t being nosy at all. The package bore no Amazon branding and appeared to be any other package we might receive in the mail. It was addressed to both of us because that is how our regular Amazon account is set up. I hadn’t considered changing it. Just something to think about if you shop at Amazon Pharmacy. [Testing Amazon Pharmacy]
Finally, I was impressed by Amazon’s clever approach and the possibility of prescriptions by mail. However, I could have done the same thing in less time by calling my doctor or pharmacy and picking up the refill myself.
However, some of the issues I encountered were one-time issues as part of the setup that I won’t have to deal with again. Other issues, like the insurance account glitch, were not caused by Amazon, at least not directly. They were anomalies in the larger system.
Parker, Amazon’s vice president of pharmacy, isn’t apologising. [Testing Amazon Pharmacy]
“I don’t think it absolves our responsibility to try to solve each and every one of those use cases just because there are things that are technically outside of our control,” he said when I told him about my Amazon Pharmacy experience.
“Our fundamental belief is that customers want pharmacy to be as simple to use as anything else,” says Amazon. And it’s a very complicated experience nowadays. You go to your doctor, you get a prescription for something, and you don’t even know how much it will cost until you get to the pharmacy counter. Then there’s the possibility that a medication isn’t covered at all, or that it’s too soon to refill the prescription. Offline, all of this occurs in a disjointed fashion. So we thought that if we offered an experience similar to Amazon, but applied to pharmacies, we could make it just as convenient.” [Testing Amazon Pharmacy]
Amazon Pharmacy’s security approach: There’s a clear line between being inside the pharmacy and ordering a prescription and being outside the pharmacy and searching and browsing. Outside of the pharmacy, you can easily search for and compare different medication options. You can search and browse to fully understand your options. But when you order a prescription, we look at your personal health information for our pharmacists, and you eventually add your insurance information, it all happens within the pharmacy’s four walls, in a very secure and different environment than the rest of Amazon.”
“We are seeing far more frequent usage of the Prime discount than we had anticipated,” says one customer. I believe there is an assumption that people who do not have insurance will want to take advantage of something like the Prime discount. In reality, it is much more often than not less expensive than your insurance. [Testing Amazon Pharmacy]
And it’s often with people who have great insurance but have high deductibles, are in the middle of the deductible period for seniors, or are in what’s known as the donut hole, which occurs in the fall when they briefly lose coverage until they contribute a certain amount. As a result, it is frequently cheaper than your insurance, especially for these very low cost generics.”
“I’m pretty excited about the amount of innovation happening in pharmacy and healthcare in general,” says the competitive landscape. When I first started PillPack in 2013, it seemed strange to be a venture-backed pharmacy. There are now a number of venture-backed pharmacies and telemedicine companies, as well as the integration of the two. So, above all, I’m excited that there is so much innovation happening for customers. I hope we’re creating something truly unique, something that draws on what Amazon has done in other areas but applies it to pharmacy. But, in general, I’m encouraged by the amount of capital and innovation taking place in healthcare and pharmacy.” [Testing Amazon Pharmacy]
