Amazon rolled out a new prescription drug subscription for Prime members called RxPass that will ship generic medications to customers' homes for a flat monthly fee of $5.
Prime members can use the new service to order commonly prescribed generic medications that treat more than 80 common health conditions, including high blood pressure and acid reflux, and the service includes free delivery.
RxPass, which is available starting Tuesday in most U.S. states, includes 50-plus generic drugs, according to John Love, vice president of Amazon Pharmacy. The aim is to provide affordable access to commonly prescribed generic medications, he said.
"At $5 a month, you know what you're going to pay for your medications. In most places, that's less than a mocha or a cup of coffee. This is the starting list, and we're excited about the coverage that it provides," he said in an interview.
"The pharmacy experience largely hasn't innovated on behalf of customers for decades now. In many cases, customers are still finding out about pricing for their medications at the point they're getting them, and it's their responsibility to budget for them and then drive and pick them up. This is something we think Amazon can really help improve—bringing the low price, the affordability and the convenience to people's medical needs," Love said.
He added, "We think this is going to be super valuable for Americans who have a chronic condition or those who might be taking two to three medications. With this specific offering, any eligible medications would all be for the single low flat fee of $5, and it'll be delivered to their door."
Amazon shook up the retail drugstore market when it acquired PillPack in 2018 and then again when it rolled out Amazon Pharmacy in 2020. The online retail giant has been rapidly expanding its reach in the healthcare space, most notably with its recent deal to buy One Medical for $3.9 billion.
In August, Amazon rolled out a new virtual medical clinic, Amazon Clinic, that aims to treat common conditions like allergies, hair loss and skin conditions.
Competition in the pharmacy space is heating up as online pharmacies that offer price transparency and mail-order services are putting pressure on brick-and-mortar retail pharmacies. Mark Cuban Cost Plus Drug Company launched an online pharmacy earlier in early 2022, aiming to disrupt skyrocketing prescription drug prices in the U.S. It currently offers approximately 350 unique generic prescription drugs that it says reflect manufacturer prices plus a 15% fee.
Just yesterday, Optum Rx launched a new tool that aims to make it easier to compare the direct-to-consumer price for generic drugs to the price with insurance.
Along with the new subscription service, Amazon Pharmacy also offers a Prime prescription savings benefit for discounts up to 80% off generic and 40% off brand-name medications at more than 60,000 participating pharmacies.
The Amazon Pharmacy subscription service works with a broad range of insurance plans. However, it's estimated that more than 40% of Americans with employment-based coverage now have high-deductible health plans, according to data from the Centers for Disease Control and Prevention. One analysis from ValuePenguin pegs the number at 53% of private-sector workers in the U.S. enrolled in HDHPs in 2020, up from 39.4% in 2015. High-deductible plans can translate to higher out-of-pocket costs.
"There are 150 million Americans who take one or more of the medications on this eligible [medication] list that we're launching with," Love said, estimating that "tens of millions" of U.S. patients, "given their insurance situation, might save on average $100 a year versus the lowest price either through insurance copay or paying cash."
Vin Gupta, M.D., chief medical officer at Amazon Pharmacy and a practicing pulmonologist, said he has seen patients with chronic diseases struggle to get access to the basic medications they need to live their lives well.
"Two in 5 Americans are underinsured. We know that 1 in 4 find it difficult to afford their medications. I've seen this with my own eyes in the pulmonary clinic that often even if somebody does have insurance, there isn't price transparency," Gupta said. "The pharmacy experience has not changed. After a patient leaves the pulmonary clinic, they have to navigate a maze of dealing with insurance and getting to the pharmacy."
Those barriers can lead to poor outcomes as new medications don’t get filled, refills don’t get picked up and patients suffer, he noted.
Amazon Pharmacy aims to improve that experience by offering value, convenience and price transparency, he noted. "These are features that up until very recently just had not existed. As a provider, I'm really excited not just about what RxPass means for patients but what we're trying to do more broadly as a pharmacy," Gupta said.
The list of eligible medications for Amazon Pharmacy's RxPass includes generic medications to treat common mental health conditions like anxiety, he noted. "We think that this is going to be meaningful to a broad swath of the country, not just those with chronic non-communicable diseases like hypertension," he said.
There's a growing list of startups targeting the $500 billion retail pharmacy sector as a massive opportunity to disrupt the status quo. Companies in the space include Alto Pharmacy, Capsule, Truepill and NowRx.
A J.D. Power study last year found that companies such as Amazon represent a growing threat to retail pharmacies, at least in terms of how patients purchase their medications. Nearly two-thirds (66%) of brick-and-mortar pharmacy customers currently have an Amazon Prime account, and nearly half (48%) of pharmacy customers are aware of pharmacy services offered by Amazon, the J.D. Power study found.
Fourteen percent of customers know about Amazon’s PillPack online pharmacy service. “Of that group, 38% say they ‘definitely will’ switch pharmacies in the next 12 months,” the J.D. Power study stated.
"The pandemic has changed a lot about how patients want to consume care," Gupta said. "I hear it all the time, 'Hey Doc, I'd love to see you at a clinic or in the hospital, but if I can get my services at home, conveniently and you can make sure it's safe and appropriate, well, that's great.' That's exactly what Amazon Pharmacy is really leaning into. It's meeting this moment where patients across the country have more agency, they know their bodies more and they're more discerning when it comes to how they want to consume healthcare services."
He added, "Amazon is leaning into its core strengths and last-mile delivery to meet patients at their doorstep and Amazon Pharmacy, at its core, enables that type of interface."