Amazon already tried—and failed—to disrupt pharmaceuticals
For all the hype around Amazon’s “disruptive” reputation as it eyes various moves into the healthcare space, STAT News points out there’s a key fact missing from those discussions: Amazon already failed to shake up the prescription drug business with Drugstore.com, and the same obstacles it ran into then still exist today.
In 1999, Amazon bought a 46 percent stake in Drugstore.com and began marketing its products on the Amazon site. Once hailed as “a likely gold mine,” the venture never turned a profit after running into problems with regulations, logistics and the existing pharmacy benefit managers that already dominated the market.
Dawn Lepore, the former CEO of Drugstore.com, said those incumbents “have a huge amount of control through the contracts they write.” In an example she said led to Drugstore.com’s downfall, then-powerful Medco Health Solutions shut out its tens of millions of customers from buying prescriptions through the site.
“For one of five people who came to the site, we would have to tell them we didn’t take their insurance,” Lepore said. “That was one of the reasons our [prescription drug] business wasn’t that big.”
Breaking into that market would only be more difficult now as PBMs have consolidated. In 2012, Medco became part of Express Scripts, which along with CVS Health and Optum control pharmacy benefit for more than 80 percent of the U.S. Still, Lepore said Amazon shouldn’t be counted out.
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John joined TriMed in 2016, focusing on healthcare policy and regulation. After graduating from Columbia College Chicago, he worked at FM News Chicago and Rivet News Radio, and worked on the state government and politics beat for the Illinois Radio Network. Outside of work, you may find him adding to his never-ending graphic novel collection.