Amazon looks to undercut rivals with monthly Rx prescription plan

Discussion
Source: Amazon
Jan 24, 2023

Amazon.com today introduced RXPass, a new subscription plan that enables Prime members to buy prescription medicines for more than 80 common health conditions delivered to their homes for $5 a month in total.

The program uses generic versions of brand name drugs to keep prices in check. Prime members can enroll by going online or using the Amazon app to update their pharmacy profile. Amazon will verify their eligibility and prescription information once Prime members are signed up for RxPass. Customers with questions can reach out to Amazon pharmacists 24/7.

“Prime members already get fast, free delivery on prescription medications, and RxPass is one more way to save with Amazon Pharmacy,” said John Love, vice president of Amazon Pharmacy, in a statement. “Any customer who pays more than $10 a month for their eligible medications will see their prescription costs drop by 50 percent or more, plus they save time by skipping a trip to the pharmacy. We are excited to offer our customers surprisingly simple, low pricing on the eligible medications they need each month.”

Amazon again appears to be relying on its low price image, plus free shipping, to drive its success in pharmacy. A 2022 Profitero study, which analyzed online prices for nearly 15,000 products across 15 non-Rx categories at 13 retailers, found that Amazon had the lowest price in 14 of them. It tied Chewy in the pet products category.

Competition within the pharmacy space continues to heat up as Amazon, CVS, Walgreens, Walmart and others make aggressive moves within primary healthcare services.

Amazon is looking to close on its $3.9 billion all-cash acquisition of One Medical, a “technology-powered national primary care organization” that combines in-person, digital and telehealth services to care for patients. The proposed deal, which was announced last July, still has to clear regulatory hurdles before it can close.

Walgreens under Roz Brewer has been particularly aggressive, focusing its efforts on becoming a leading healthcare provider. The drugstore giant has been rapidly scaling its VillageMD clinics offering primary care services under the care of doctors in its stores. Walgreens expects to have 1,000 clinics in operation across the country by 2027. It has also gained a controlling interest in CareCentrix, which coordinates visits by medical professionals to patients’ homes after they have been discharged from hospitals.

DISCUSSION QUESTIONS: Will RxPass be an attractive perk for Amazon Prime members and those considering  subscription? How do you see the competition among the big retail pharmacy players shaping up in 2023?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"It’s definitely an attractive perk, we’ll see if it’s strong enough to compete with the patient/pharmacist relationship many of the big retail pharmacy players still enjoy."
"While this concept may work for basic medicines, I would be curious to see how this plays out for high-ticket medicines."
"I’m not fond of the duopoly of chain drugstores, either. So I suppose I’m rooting for another player to become a powerhouse. My vote is with Mark Cuban for now."

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22 Comments on "Amazon looks to undercut rivals with monthly Rx prescription plan"


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Mark Ryski
BrainTrust

This new service will be a no-brainer for some Amazon Prime members. It’s time for Amazon to drive revenue with their medical market plays and this one appears to have legs. Given Amazon’s significant Prime base, and a demographic that requires more medicine as they age, this has all the makings of a hit for Amazon. But while Amazon’s offering is strong, I don’t expect the other major pharmacy/health players to sit by and watch their market share erode. This just may be the beginning of what could be a price war.

Dave Bruno
BrainTrust

Where’s the catch? Assuming the generics are of acceptable quality, I see no downside for Amazon customers. Perhaps this offer can help spark radical change in the prescription industry. Prescription pricing is, in a word, absurd. I still marvel that people have to search coupon aggregators like RetailMeNot in an attempt to find the best price for their life-saving medications.

Cathy Hotka
BrainTrust

The numbers don’t add up here. In order to best rivals like Mark Cuban’s pharmacy, Amazon would have to add hundreds of other medications. Let’s revisit this when it’s ready for Prime time.

Jenn McMillen
BrainTrust

Hmmmm. Convenience + the reputation of Amazon + cost savings where everything seems more expensive these days. Seems like a big win for consumers.

Susan O'Neal
BrainTrust

Amazon’s Prime Membership Rx value proposition not only removes the friction of the trip, it also removes the friction of price and price variability. It’s definitely an attractive perk, we’ll see if it’s strong enough to compete with the patient/pharmacist relationship many of the big retail pharmacy players still enjoy.

David Spear
BrainTrust

Let the price war games begin in pharmacy — and it couldn’t come at a better time as prescriptions have eaten into many consumers’ pockets over the years. Prime users will love this and want more drugs added to the list every day. Watch for the other big players to announce new plans for their Rx services soon!

Ken Morris
BrainTrust

Every segment of retail that Amazon sets its sights on is vulnerable with this low-cost juggernaut. Amazon knows it must win the prescription game while Walgreens and CVS compete for in-person medical care. This might be a tough slog, though, with two giants in CVS and Walgreens fighting neck and neck and both competing against Amazon. I believe that, in the end, patient care will win out. The personal touch in stores will remain strong, but Amazon will get their slice of the pie. Imagine the additional wealth of personal information (aka data) Amazon will amass once customers are incentivized to tell all regarding their prescriptions!

Neil Saunders
BrainTrust

Amazon will hope that the simplicity and low-cost of RxPass will attract more people to Amazon Pharmacy which, although it has grown and taken some market share, has fallen a long way short of disrupting the drug market. While the $5 flat fee for RxPass is competitive, Amazon will need to contend with other low-cost drug providers such as Cost Plus Drug Company, GoodRx, and Walmart’s $4 drug list. It may also struggle to overcome the entrenched habits of many consumers who are happy to continue using the major drugstores to fill their prescriptions.

Jeff Sward
BrainTrust

This sounds like a pretty amazing program. How could it possibly get any more convenient or cost efficient for the customer? It doesn’t sound like a money maker for Amazon. Indeed, it sounds more like another bedrock foundation that anchors the customer to Amazon as the go-to retailer for a vast array of products. It’s great to see this level of competition in the health care sector. Health care — the drug companies, the insurance companies, the hospital system — have long needed a competitive factor to bring costs under control. It looks like a healthy dose of competition is elbowing its way into the system.

Lisa Goller
BrainTrust

RxPass makes Amazon even more attractive by giving members more convenience, choice and value. Amazon’s affordable, customer-centric offering contrasts with the high-margin status quo in pharmacy.

Retail pharmacy leaders face a lucrative opportunity to grow by satisfying unmet consumer needs for health and value.

Gary Sankary
BrainTrust

This is a good value for patients with simple maintenance-type prescriptions. As long as there are no glitches or changes to the customer’s remedy it’s all is good. Suppose the customer wants to go on vacation (or travels for business as I do). In that case, it might be trickier as having that one-on-one relationship with your pharmacist helps with an extra week of supply or those rare times when you get the wrong medication and need a quick turnaround on a refill. Those are minor things in the big picture but, when they happen, it’s a big deal for the patient. I do think this will be successful for Amazon and will save patients who can use it.

Paula Rosenblum
BrainTrust

As Cathy said, it doesn’t add up numbers-wise and I’m not so keen to have Amazon fill my prescriptions. More data = more ads that drive customers a bit crazy.

Also my level of trust in Amazon has gone down quite a bit, for reasons I can’t articulate. The company just strikes me as very unfocused and spends billions throwing things against the wall to see if they stick.

I’m not fond of the duopoly of chain drugstores, either. So I suppose I’m rooting for another player to become a powerhouse. My vote is with Mark Cuban for now.

Shep Hyken
BrainTrust

Amazon continues to be the leader of the online retail world. RxPass is another version of the same; lower prices and higher convenience. If it works for the customer, why wouldn’t they jump on board?

Gene Detroyer
BrainTrust

From day one, Amazon has grown its business by being customer-centric. They ask what we can offer the customer that is convenient and affordable. How do we make Prime a part of the customer’s life even more?

Healthcare is a natural target, and prescriptions are a logical place to start.

Patricia Vekich Waldron
Staff

This is the biggest bet yet in Amazon’s long term strategy of dominating categories one-by-one. It will be very attractive to consumers, incite competitors to react and generally drive change and lower prices at a time when healthcare is top of mind for many.

It remains to be seen if it will be profitable to Amazon in the short-and longer-term.

Natalie Walkley
BrainTrust

I am surprised Amazon hasn’t launched this sooner. Seems like a no-brainer in many ways. Yet my pharmacist somehow works her magic to get my son’s lifesaving inhaler (that expires every eight to 12 months) down from $600 to almost nothing. While this concept may work for basic medicines, I would be curious to see how this plays out for high-ticket medicines.

Phil Rubin
BrainTrust

It’s difficult to see this not working for Amazon and many of its Prime members. If nothing else, the law of large numbers means this is going to have a significant impact on the Rx business.

Dave Wendland
BrainTrust

I’ve been anticipating this type of introduction for quite some time. Amazon is well-positioned to capture a portion of the Rx market with this initiative. More than 150 million people are on at least one of the medications included in their initial formulary. And despite not being able to service Medicare or Medicaid patients, this is a win-win for Amazon and its Prime members seeking consistent value.

Carlos Arambula
BrainTrust

Amazon has earned the trust of millions of US consumers in regard to home delivery and online shopping. Considering how prescription programs are farmed out to drug benefit providers with notoriously awful customer service, I believe RxPass will be successful. It will not be difficult for Amazon to introduce an advantageous point of differentiation vs the competition.

Ananda Chakravarty
BrainTrust

One of Amazon Primes’s better perks, but not sure it will increase participation in an almost saturated U.S. Prime market. I expect increased engagement around pharmacy across all the major drug and some grocery retailers. There will be partnering with Express Scripts and mail order pharma as well — maybe even some smaller vendors consumer by the drug retailers. Amazon continues to look for big markets to conquer. Will have to see how they fare here.

Holden Bale
Guest

This isn’t just about pharmacy, or taking share from pharmacies or grocers. Or moving into wellness.

It’s about reinforcing the value proposition of Amazon Prime and making it stickier — it’s not trivial to transfer prescriptions, and the “cognitive load” to switch once you’re on auto-delivery is not trivial for consumers — in a time when people are reassessing their household spending.

Without Amazon Prime, the cost offset for the retail business disappears. Amazon Prime has to be strong for Amazon to retain competitive advantage, and viewed through that lens, this is a great lever for reinforcing that value proposition.

Kai Clarke
BrainTrust

Yes! The RX market is rapidly growing and adding an online prescription plan along with Amazon’s prime opportunities will only increase its appeal to current and potential clients. Amazon still needs to be more aggressive with the scope of products it is offering in order to continue to compete in the future.

wpDiscuz
Braintrust
"It’s definitely an attractive perk, we’ll see if it’s strong enough to compete with the patient/pharmacist relationship many of the big retail pharmacy players still enjoy."
"While this concept may work for basic medicines, I would be curious to see how this plays out for high-ticket medicines."
"I’m not fond of the duopoly of chain drugstores, either. So I suppose I’m rooting for another player to become a powerhouse. My vote is with Mark Cuban for now."

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