Employee Benefits Advisory: Understanding Amazon Pharmacy and Amazon PrimeRx

Amazon recently announced two new pharmacy offerings; Amazon Pharmacy gives individuals the ability to complete their entire pharmacy prescription transaction online, and Amazon PrimeRx, which is a discount program for Prime members to provide savings when not using insurance.

Amazon Pharmacy

Amazon Pharmacy service allows individuals to purchase up to a 30-day supply of their medication online for home delivery. Embedded within the program is a transparent pricing feature that shows the cost of the prescription with and without insurance to allow health plan members to make the best consumer decision for their purchase.

Individuals can sign up via amazon.com/pharmacy with their basic information, medications, and health history. Amazon Pharmacy will accept most insurance plans & prescriptions can be sent directly to Amazon Pharmacy by the prescriber or Amazon will request the prescription on the individual’s behalf. Pharmacists are available 24/7 to provide guidance and consultation. Prime members will receive free two-day delivery; other customers get free 4-5 day delivery or can upgrade to two-day for an additional shipping fee.

The following are not available through Amazon Pharmacy:

  • 90 day fills
  • Automatic refills (individuals will receive notification when it’s time for a refill)
  • Coupon or discount codes
  • Breast pumps
  • Compounded medications
  • Diabetic testing and administration supplies (e.g. test strips, glucose meters, and pen needles)
  • Medical devices (e.g. braces, insulin pumps, and nebulizers)
  • Pet prescriptions
  • REMS medications
  • Schedule II-controlled medications
  • Specialty medications
  • Suspensions (e.g. liquid amoxicillin or fluconazole)
  • Vaccines
  • Vitamins and over-the-counter (OTC) items
  • Prescriptions for customers under the age of 18
  • Prescriptions that require shipping to Hawaii, Illinois, Kentucky, Louisiana or Minnesota

Amazon Prime Rx

Amazon Prime members will have access to a prescription benefit to save as much as 80% off generic and 40% off brand name medications when not using insurance. This discount program will be available at 50,000 participating retail pharmacies including CVS, Walgreens, Rite Aid & Walmart. Members can present a digital savings card when not accessing through Amazon Pharmacy to receive the benefit. The prescription savings benefit is for Prime members and one other adult member of their Amazon household. The program, administered by Inside Rx, LLC, is not insurance and cannot be combined with any insurance or secondary payer program.

Additional information on the program, including the digital Prime member prescription savings card can be accessed at amazon.com/primerx.

Oswald Observations

The Amazon entrance into the pharmacy space is a potential disrupter for an industry that is notoriously complex and competitive. While many have increasingly relied on mail delivery methods for goods and services to avoid possible exposure to the coronavirus, prescriptions dispensed via mail have not yet experienced the same significant growth. It will be noteworthy if the Amazon entrance makes an immediate impact relative to how individuals obtain their medications. The transparency component of the program is a welcome addition that promotes a better understanding of prescription drug costs, hopefully driving more consumerism in decision-making.

The Prime discount benefit competes with other like discount card providers and is especially beneficial for those not covered by insurance or with higher initial patient responsibility. While it was already a go-to resource, Amazon has played a more essential role amidst the pandemic that the population will likely continue to gravitate towards.

The jury is still out as to whether Amazon Pharmacy will produce any substantial savings over their retail competitors. The initial entrance comes as an alternative delivery option for members as opposed to a fundamental shift in the underlying pharmacy structure and pricing model. There are also limitations to consider in terms of which medications can be ordered through the pharmacy, no same day shipping, inability to ship to certain states or order drugs for minors, and the need for individuals to initiate a new order each month that cause the Amazon program to be more restrictive than other retail dispensing options. Given Amazon significant brand presence it will be worth watching if they continue to expand further into the health care arena.

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Note: This communication is for informational purposes only. Although every reasonable effort is made to present current and accurate information, ISBC makes no guarantees of any kind and cannot be held liable for any outdated or incorrect information.