Updated at 12:30 p.m. Pacific. Tuesday.
Amazon will offer prescription medications for home delivery through a new online drugstore, promising Prime members free two-day delivery and discounts of as much as 80% on medications purchased without insurance.
This is Amazon’s big move into the online pharmacy business, following the tech giant’s $753 million acquisition of prescription-by-mail company PillPack in 2018.
Amazon will be competing for a bigger share of the estimated $300 billion U.S. pharmacy market against a host of online drugstores and pharmacy delivery services from big rivals such as CVS, Walgreens, Walmart and Target, as well as smaller startups and traditional drugstores.
The ripple effects were immediately clear in the stock market. Shares of CVS and Walgreens declined more than 8% Tuesday morning following the news. RiteAid was down more than 16%. GoodRx, a newly public company that offers prescription price comparisons, saw its stock fall more than 20%, as Amazon introduced a similar feature as part of the rollout.
Amazon Pharmacy, as the digital drugstore is known, will be available on Amazon.com and the Amazon app. Doctors and other healthcare providers will be able to send prescriptions to Amazon, at the request of a patient, as they would with any other pharmacy.
The prescription discounts represent a new benefit in the $119/year Prime membership program, along with existing benefits such as free delivery and Prime Video streaming. In addition to receiving prescription discounts in the Amazon Pharmacy, Prime members will also be eligible for prescription discounts at more than 50,000 pharmacies nationwide.
Discounts for Prime members will be up to 80% on generics and 40% on brand names, the company says. In some cases, the Prime prescription discounts could make the immediate out-of-pocket cost for a prescription lower than when using insurance. Amazon says it also works with most insurance plans.
No, Amazon says, it won’t use customers’ personal health information for advertising or marketing purposes outside of the digital drugstore without their clear permission, complying with the Health Insurance Portability and Accountability Act, better known as HIPAA. Customers will have a secure pharmacy profile where they can store their insurance information and manage their prescriptions and payment options.
Amazon also says it won’t deliver Schedule II controlled medications, including most opioids.
Amazon’s moves reflect its growing interest in health healthcare. Existing initiatives include its Haven healthcare joint venture with JP Morgan Chase and Berkshire Hathaway; Halo health tracking device; COVID-19 testing for Amazon employees; and Amazon Care virtual and in-person clinics, currently offered as a pilot program for employees in the Seattle region.
The company says Amazon Pharmacy will offer a “seamless” and familiar browsing experience for Amazon customers, with features including the ability to compare the Prime discount price with the cost of getting a prescription using insurance and a copayment. However, Amazon says customers should also consider factors such as their insurance deductible when deciding which option to choose.
The company says PillPack will remain “a distinct service for customers managing multiple daily medications for chronic conditions,” with the ability to receive prescriptions presorted into packaging for individual doses.
Health insurer UnitedHealth Group acquired PillPack competitor DivvyDose for a reported $300 million in September.
Amazon is partnering Inside Rx, a subsidiary of Cigna’s Evernorth, to administer the prescription discounts.