How the Amazon-PillPack deal could benefit pharma and win over patients
While pharmacy retailers quailed at the news of the Amazon-PillPack deal, a survey found that patients and doctors are more receptive to disruption in the industry.
Amazon announced the $1 billion deal with PillPack on Thursday, which sent pharmacy retailers' stocks falling and wiped out $17.5 billion in market value for these companies, according to The New York Times. Signs that Amazon was planning its move into drug distribution began last year, when the company began acquiring state drug distribution licenses. With the acquisition of PillPack, expected to close later this year, Amazon would gain these licenses in 49 states.
PillPack doesn't pull the same weight as pharmacy giants such as Walgreens or CVS, which have thousands of stores nationwide; the company has only an estimated 40,000 users.
Although the deal hit pharmacies hard, it could be beneficial to pharma companies. A survey from DRG Digital found that among patients who struggle with medication adherence, 34% are more likely to get prescriptions filled or refilled on time if they're delivered to their homes.
If hard-to-reach patients are more likely to use a delivery service such as Amazon's, pharma companies could partner with Amazon to get support and education programs to patients.
“It's a tremendous opportunity for pharmas to get this valuable patient education and patient support content they've created out to patients,” said Matt Arnold, DRG Digital principal analyst. “If Amazon becomes a huge player in drug distribution and pharmas can partner with them to push out patient support resources, financial assistance, etc., I think that offers a powerful channel for distributing patient support.”
Doctors are largely on board with Amazon as a pharmacy, as well. More than half of U.S. physicians say they would trust Amazon as a drug distributor, according to the survey, and 61% of doctors also say Amazon's entry into drug distribution could reduce medication costs.
“There's desperation out there about drug prices and all the hoops that patients have to jump through to get their medications,” Arnold said. “That places an enormous burden on the physician and healthcare providers across the board because they're the face of our healthcare system. There's an enormous appetite for solutions to these problems.”
Patients are more divided. More than one-third are interested in receiving medications from tech companies and 20% want medications from Amazon specifically.
Forty-one percent of patients trust their local pharmacy more than Amazon for prescriptions and 38% are worried about how tech companies will use their personal health information.
Although consumers have expressed concern about how their personal information is used by technology companies, Arnold says Amazon could make its case based on economic value and convenience.
“What we found in our studies time and time again is that people are really weighing the trade offs in privacy and data security versus health and economic benefits,” he said. “If Amazon can show people a real material benefit to their health or their wallets, people are going to weigh that against their worries about giving tech company all of their personal information.”