Health

Testing Amazon Pharmacy: Tech giant’s clever system collides with realities of modern healthcare

Testing Amazon Pharmacy: Tech giant’s clever system collides with realities of modern healthcare

Amazon’s move into healthcare is multifaceted, including COVID-19 testing, its Halo health band and service, cloud services for healthcare and life sciences, and even primary care for its employees.

A major motivation for the company: the sheer size of the healthcare market, and the massive problems to be solved.

“Amazon is a big company now, still with big growth ambitions, and so they need to tackle big markets,” said John Rossman, a former Amazon business leader and the author of The Amazon Way, speaking on a recent episode of GeekWire’s Day 2 podcast. “Healthcare is going to become a bigger and bigger component of what their strategy is going to be, from every angle.”

But one of the tech giant’s healthcare initiatives seems especially well-positioned to benefit from Amazon’s traditional e-commerce expertise: prescriptions by mail. The company launched its Amazon Pharmacy in November 2020, building on its 2018 acquisition of PillPack.

“Really, we wanted to make a pharmacy experience that was just as easy to use as Amazon generally,” said TJ Parker, the PillPack CEO and vice president in charge of Amazon Pharmacy, and a former practicing pharmacist himself.

Amazon is competing against traditional pharmacies such as CVS, Walgreens and RiteAid, big retail rivals such as Walmart and Target, and healthcare technology companies such as GoodRx — whose chief financial officer, Karsten Voermann, sought to downplay the competitive threat from Amazon on a recent earnings call.

“Based on third-party data, they have not been successful,” Voermann said of Amazon. “Mail order prescriptions only make up about 5% of fill count in the U.S. … Third-party data indicates that Amazon Pharmacy is not gaining momentum and that their volume remains incredibly small.”

But this is Amazon, a company with the resources and tenacity to pursue big challenges and opportunities for many years.

So what’s it like to use Amazon Pharmacy?

To find out, I signed up to use the service on a routine prescription refill. Amazon Pharmacy impressed me with its convenience and privacy. But I also encountered obstacles, some due to kinks in the healthcare system outside of Amazon’s control, that made the overall experience less than seamless.

On this episode of GeekWire’s Health Tech Podcast, I talk with Amazon’s TJ Parker to learn more about the Amazon Pharmacy, using my experience to inform the discussion.

Listen above, or subscribe in any podcast app, and keep reading for highlights.

First, the good parts of Amazon Pharmacy, as I experienced the service.

How about that, a painless modern health care experience! Well, not quite.

She wasn’t being nosy. The package didn’t have Amazon branding, and it looked like any other package we might get in the mail. It was addressed to both of us because that’s the default in our regular Amazon account. I hadn’t thought to change it. Just something to consider if you use Amazon Pharmacy.

Ultimately, I was impressed by Amazon’s smart approach and the potential of prescriptions by mail. But at least at the outset, I could have accomplished the same thing, in less time, by calling my doctor or pharmacy and picking up the refill myself.

Then again, some of the problems I encountered were one-time issues as part of the setup, which I won’t need to solve again. Other problems, such as the insurance account glitch, were not Amazon’s doing, at least not directly. They were quirks of the larger system.

Parker, Amazon’s vice president of pharmacy, isn’t making any excuses.

“Just because there are things that are technically outside of our control, I don’t think that absolves our responsibility to try to solve each and every one of those use cases,” he said when I told him about my experience trying Amazon Pharmacy.

More highlights from Parker’s comments, edited for clarity and length.

Why Amazon got into the pharmacy business: “Our fundamental belief is customers want pharmacy to be as easy to use as anything else. And today, it’s a very complicated experience. You go to your doctor, you’ll get a prescription for something, you don’t even know what the price is until you show up at the pharmacy counter. Then you may run into issues with a medication even being covered at all, or it’s too soon to refill the prescription. All this happens in a very disjointed way offline. And so we felt like if we offered an experience that was just like Amazon, but applied to pharmacy, we could make it just as convenient.”

Amazon Pharmacy’s approach to security: There’s this clear demarcation from being inside the pharmacy and ordering a prescription, and from being out of the pharmacy and searching and browsing. You can easily search for and look at different options for medications outside the four walls of the pharmacy. You can search and browse and really understand what your options are. But once you’re actually ordering a prescription, once we’re looking at your personal health information for our pharmacists, and once you’re ultimately adding your insurance information, that’s all happening within the four walls of the pharmacy, in a very secure and different environment than the rest of Amazon.”

Customer uptake of the PrimeRx discount: “We are seeing far more frequent usage of the Prime discount than we had anticipated. I think there’s this assumption that it’s mostly folks that don’t have insurance that would want to use something like the Prime discount. In reality, it can be cheaper than your insurance much more frequently than you would think. And oftentimes, it’s with folks who have great insurance, but they might have high deductibles, they might be in the middle of the deductible period for seniors, they might be in what’s called the donut hole, which is typically in the fall when they briefly run out of coverage until they contribute a certain amount. And so it tends to be cheaper than your insurance quite frequently and especially for these very low cost generics.”

The competitive landscape: “I’m pretty thrilled about the amount of the amount of innovation happening in pharmacy and healthcare generally. When I looked back to starting PillPack, in 2013, it was pretty weird to start a venture-backed pharmacy. And now there’s a number of venture-backed pharmacies, telemedicine companies, the integration of the two. So more than anything else, I’m excited that there’s so much innovation happening for customers. I hope that we’re building something that is truly unique, that really leans into the things that Amazon has done in other places, but applies that to pharmacy. But generally I’m thrilled to see the amount of capital and innovation happening in healthcare in pharmacy generally.”

Listen to the full episode above, and subscribe to GeekWire’s Health Tech Podcast in Apple Podcasts, Google Podcasts, or wherever you listen. 

Audio editing by Curt Milton.

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