Tag: amazon

Dr. Alexa, MD

By Emmie Futrell, Class of 2018

Picturing Amazon drones dropping pharmaceuticals from the sky, or Amazon’s Alexa
becoming Dr. Alexa, MD, may not be so far-fetched as it sounds. Amazon has reportedly
obtained approval for wholesale pharmacy licenses in at least 12 states. They include Nevada,
Arizona, North Dakota, Louisiana, Alabama, New Jersey, Michigan, Connecticut, Idaho, New
Hampshire, Oregon and Tennessee. An application is still pending in Maine.
The infrastructure required for Amazon to begin shipping pharmaceutical drugs to
consumers is still in its infancy—the recently obtained licenses only allow Amazon to sell
medical-surgical equipment, devices and products. These include tools like syringes, ultrasound
gel, and sutures, while Amazon’s license in North Dakota suggests that it may be able to
distribute medical equipment and gas. Complex regulations and specific pharmacy licenses that
vary state-to-state will provide additional hurdles for Amazon, if the end goal is to distribute
prescription drugs. For example, Amazon would need to be certified by the National Association
of Boards of Pharmacy as a “Verified Accredited Wholesale Distributor,” in order to distribute
pharmaceuticals.

However, these hurdles may not seem as high as one would expect. With Amazon’s
recent acquisition of Whole Foods, Amazon could implement and use Whole Foods pharmacies
as a platform to create a mail-order pharmacy, effectively controlling an Amazon-owned supply
chain. Amazon’s reach and boundary-pushing technology could make the company attractive to
name brand pharmaceutical manufacturers, searching for innovative ways to reach their
customers.
This move towards the outskirts of the pharmaceutical industry has not been lost on
traditional pharmacy benefits managers like Walgreens and CVS. In January of 2017, Walgreens
Boots Alliance and FedEx announced a several-year agreement to install FedEx pick-up and
drop-off services in Walgreens stores. The long-term goal of this agreement is to create
infrastructure for reliable deliveries of prescribed pharmaceuticals to Walgreens customers, to
ensure that elderly, disabled or other mobility-challenged patients are still able to access their
much-needed prescriptions. Currently, mail order pharmacy services only dispense about 1 in 10
prescriptions of the total four billion that are filled in the United States. Perhaps this recent
Amazon movement intends to increase that number.
There are many other benefits to the mail-order pharmacy framework, enough that
insurance providers like BlueCross BlueShield of Tennessee have given their endorsement. Not
only are mail-order pharmaceuticals convenient, but they could also have a positive effect on
adherence. The BlueCross framework of delivering a 90-day supply ensures that there are no
gaps in prescription access that may be caused by attempts to plan a trip to a local pharmacy.
With the current climate seemingly accepting of the movement of prescriptions out of the
traditional brick-and-mortar pharmacies, the industry seems poised for Amazon’s tiptoe into this
market.

CVS and Aetna Merger

By Brandon Huber, Class of 2019

According to the Wall Street Journal, CVS and Aetna are reportedly in serious talks over a potential merger between the two healthcare giants. With the potential buyout price in the ballpark of $70 billion, the deal would not only set the record for the largest merger of any two companies in 2017, it would easily be considered the largest health provider merger of all time, shattering Express Scripts’ $29 billion merger with Medco back in 2012.

The deal would combine CVS, currently the largest pharmacy retail chain, with Aetna, the third largest health insurer provider in the United States. Although both companies have declined to comment on the negotiations of the deal, there have been reports that a deal could be reached by the two companies as soon as December. Despite the growing pressure over the last few years on healthcare providers to consolidate, due in large part to soaring medical costs, a merger of this size promises to send a shockwave across the entire healthcare industry.

The merger comes on the heels of news that Amazon, the online retail giant, almost certainly will enter the prescription-drug market as soon as 2019. Although Amazon has not yet announced any official plans to enter the pharmacy retail business, there can be little doubt that even rumors of such plans would be enough to motivate CVS, and other pharmacy retail chains, to find creative ways to expand and grow.

CVS’ buyout of Aetna, at least from the outset, seems to present the perfect opportunity for both companies to benefit from the deal. On the other hand, however, whether consumers stand to gain any benefit from the merger remains to be seen. From Aetna’s perspective, the merger affords the opportunity to provide better care management. Insurers have long believed that the best way to control rising healthcare costs is to ensure they have more access into the lives of their beneficiaries. The deal would help Aetna ensure its beneficiaries were staying on their medicines, getting the care they need at more cost-effective locations—like a CVS health clinic—as opposed to a more expensive and perhaps unnecessary hospital visit.

Conversely, not only would CVS be able to expand its reach within the healthcare market, the deal would drive more traffic to its stores as more of Aetna’s insured beneficiaries would seek preventive care and treatment for less serious medical issues at the clinics located within CVS stores. Additionally, CVS could expect an influx of customers because Aetna’s beneficiaries would likely use CVS to get their prescriptions filled.

With that said, however, despite the near guarantee that both parties would benefit significantly from such a deal, there are some who remain skeptical as to whether the deal will benefit consumers. According to Amanda Starc, associate professor of strategy at Northwestern’s Kellogg School of Management, CVS’ position as a pharmacy benefit manager would allow the merged companies to negotiate lower drug prices with pharmaceutical manufacturers. It is unlikely, however, that these newly acquired drug-rates, now available to Aetna as a result of its newly acquired market power, would translate into lower prices for customers and not into profits for the company.