Photo: Amazon
Will Amazon Conquer Healthcare Next?
Amazon is deepening its commitment to healthcare with the introduction of automatic coupons for more than 15 insulin and diabetes care brands through Amazon Pharmacy.
An estimated 85% of manufacturer-sponsored coupons go unused, leaving significant savings for consumers on the table. Amazon’s service aims to reduce the financial burden insulin and similar medications can have on many consumers — one in 10 Americans have diabetes, about 8 million use insulin to help manage their condition, and 14% of them struggle to afford the cost of treatment — by tapping into these coupons.
The coupons will be aimed at the most commonly prescribed products from manufacturers, including Novo Nordisk, Eli Lilly, Sanofi, Dexcom, and Insulet. They will cover items like insulin vials, pens, continuous glucose monitors, and pumps, with the goal of reducing the costs for eligible customers to a starting level of $35 per month. These benefits are being added to the free delivery and access to pharmacists already provided to Amazon Pharmacy members.
Amazon is enabling the automatic redemption of coupons through a proprietary technology that promises to work for all eligible customers, no matter if they’re insured, underinsured, or uninsured. The final price is viewable directly on Amazon to ensure that these shoppers don’t miss out on any potential savings elsewhere.
However, there are limits to the program. The e-commerce giant noted that these coupons are ineligible for use with other Amazon programs, like RxPass or the prescription savings available for Prime members. Additionally, they don’t apply to patients covered by state or federal healthcare programs.
Non-pharmacy retailers entering the healthcare space have often touted their ability to reduce costs for customers as one of the key benefits of their involvement. The aforementioned RxPass offers a selection of generic medications for $5 a month, and Prime members have access to six-month prescriptions for the equivalent of $1 per month — a move that was timed to coincide with a different cut-price subscription plan from medtail rival Walmart.
Amazon’s healthcare push isn’t limited to retail, either. Amazon Web Services recently launched HealthScribe, a HIPAA-eligible generative AI-powered solution that can help healthcare software providers automatically create clinical documentation.
The non-retail push could prove helpful if Amazon is hoping to turn its pharmaceutical ambitions into major profits. A 2022 Morgan Stanley survey found that just 2% of consumers cited Amazon Pharmacy as a reason to want Prime, according to Business Insider. That hasn’t slowed down Amazon, which closed on its acquisition of One Medical in early 2023 to further enhance its telehealth capabilities.
Healthcare remains a lucrative industry even if pills and consultations aren’t moving Prime subscriptions. The space was valued at $4.3 trillion in 2021 and is estimated to grow to $6.2 trillion by 2028, according to data from Insider Intelligence. Even a small slice of that pie is valuable, and if Amazon can become as big a name in healthcare as it is in e-commerce and web services, the company that conquered the internet could be poised to conquer the world.
Discussion Questions
DISCUSSION QUESTIONS: Will the addition of automatic coupons for insulin help make Amazon Pharmacy more attractive to potential customers? Do you think that the full scope of Amazon’s healthcare ambitions are coming into sight, or is there more to be revealed?
Poll
Loading …BrainTrust
Nicola Kinsella
SVP Global Marketing, Fluent Commerce
David Spear
VP, Professional Services, Retail, NCR
If by conquer we mean dominate, then there is no chance of this happening any time soon. Amazon is a very small player in healthcare and is surrounded by giants who have no intention of allowing it to succeed. We have already seen the failure of Amazon Care, which did not have the scale to win over enterprise clients.
That said, Amazon can be disruptive and start to shake up a complex and bloated industry which needs change. There are two lines of attack. First, using its digital prowess to connect various aspects of the healthcare system – patients, providers, insurance, and so forth. This is extremely difficult because of regulatory requirements and the sheer volume of data and parties involved but should be exactly the type of technical task that Amazon is good at. Second, creating a very customer centric health offer that is easy to use and simple to understand. Amazon is trying to do this with One Medical, but it will take more time and investment to scale.
Quite honestly, if Amazon wants to get really serious about getting into healthcare it should acquire a drugstore and build on the back of prescription and primary care services. Rite Aid is in a real financial pickle with massive losses, so is one possibility. Or it could be brave and acquire Walgreens. I think CVS would be a bit too expensive and ambitious. The added advantage of acquiring a drugstore is that Amazon could accelerate its grocery retail and physical retail ambitions. Let’s face it, they can’t be worse at retailing than the drugstores!
In the other thread we are talking about how Amazon still – after numerous reports and court rulings over a decade – still can’t or won’t ensure children’s products listed on their site are free of lead. The laws are clear and the paperwork is straightforward. If I’m CVS and really feel threatened by this, all I have to do is drop one TV ad calling Amazon’s safety culture and commitment into question.
Automatic coupons for insulin is just another piece of Amazon’s health care portfolio puzzle. Amazon is betting on the power of lower prices via coupons as a way to help reduce the cost of essential medicine and to claim their stake in this massive market opportunity. And while this will be attractive for some consumers, this is a modest program in the healthcare market. Amazon’s healthcare ambitions continue to evolve as the competitive landscape and market continues to evolve.
I believe Amazon can make an impact on healthcare, because size matters. They can save people money and that’s a good thing, but we need to do something else about the cost of prescription medicine in this country. We pay more than any country worldwide and that is a huge punishment for the poor people of this country. These policies are killing people. There needs to be a change.
Let’s not forget that for Amazon, it’s more about data, data, data than location, location, location. Since it essentially sells everything, the ability to identify Prime members as diabetic means not only potential insulin sales but sales of all the other products needed. From sugar-free candy to specialized travel kits and socks, it is all just a click away.
I was on the receiving end of the marketing blitz for this from Amazon, and after really ready to lose my cool with the CVS inside Target for all the ways they manage to screw up something as simple as a refill – every single time, every single stinking time – I moved all my Rx’s to Amazon. The setup was easy – even my doctor was like “Oh, Amazon does this now? Wow!” – but I haven’t been on it long enough for the first refill to happen yet, so my continued satisfaction remains to be seen.
They simply cannot dominate when it all has to be delivered – if I need something right away, I’m going to have to go to a local pharmacy to get something same day. But when it comes to the predictable basics, this is one place I feel guilt-free giving my business to Amazon. You want to disrupt/destroy the “we’ve always done it this way” in the pharmacy industry? All power to you, Amazon!
Never mind conquer, Amazon just needs to set foot into the healthcare business in order to make a difference. Healthcare needs competitive dynamics to effect access and pricing. The whole coupon thing in drugs is weird. Why not offer access and affordability to drugs like insulin? Why do coupons even have a role?
Healthcare may by more complicated than apparel or groceries or most widget businesses, but if Amazon can help level the playing field it would be an enormous service.
Amazon’s coupons will attract users of insulin or diabetes drugs, as it makes a necessary habit cheaper.
Amazon has big ambitions. It’s just getting started in healthcare.
Healthcare is a category a lot of players have been chasing for a long time. But it’s complicated. Automatic coupons will be an incremental step in the right direction, but Amazon will need to make many more. It will take lots of initiatives like this in the space to build a solid pharmacy business. Given Amazon’s relentlessness, I have no doubt they will ultimately big a big player in this space.
Amazon won’t conquer the healthcare industry, but they are poised to disrupt a slice here and there, which is good for everyone. I’m with Neil on the idea of acquisition. If Amazon were really serious, they’d acquire a drugstore chain to immediately amp up their game in prescriptions and primary care services. This would begin to fuel their transformation efforts with consumers and health care partners.
I agree with your prediction that Amazon may need to amp up their game with an even bolder footprint in the space. But, the steps (and even missteps) they are taking are chipping away at a market segment too large to ignore and ripe for an innovative breakthrough.
Two things that will help Amazon make an impact with patients with diabetes:
Make no mistake, Amazon wants to be actively involved in the healthcare space. And this is yet another leap in that direction.
Filling an RX is a pretty competitive scenario. Filling an RX with a coupon adds a bit more complication, athough “coupon only” sites like Good Rx seem to have that one under control. However, the less visible part is dealing with insurance companies, getting Dr’s to renew RX’s on time, obtaining prior authorizations, and all the backroom stuff so your patients get reliable delivery is even harder. Offering customers a service like informing them that the “cash price” with coupon is less than your copay might be interesting, but in terms of Amazon mastering all of these functions – Jury is out.
As a marketer, I have learned not to underestimate the potential of any possibility for Amazon, and health care is no exception. They are in an almost ideal position to be a huge player in health care. Competitors are past their peaks, or not strong, or even a mess. That is not to say that Amazon won’t be even a bigger mess. That is certainly possible. My prediction is that Amazon will come on strong but have many glitches before its all figured out, but in the long run I think they will own the market.
Amazon is going to be a force in almost any industry it decides to jump into. Prescriptions that are automatically renewed every month are the perfect subscription model, and Amazon is a strong player in that area.
At the risk of confusing topics: one of the other threads today was also about Amazon, and even tho IMHO it came across as something of an anti-Amazon rant, nevertheless it DID raise important issues about safety and control; a major part of Amazon is third party sellers, something which by nature is decentralized and loosely controlled. Healthcare, of course, is just the opposite, and I can’t help but wonder if there won’t be an inevitable conflict as Amazon attempts to “conquer” it.
Pharmacy remains a category where physical retail dominates, both in the traditional context as well as in “digitally enabled” transactions where a refill can be initiated online and then picked up in-store.
This category is one that will be more difficult to penetrate in any meaningful way, and I would not vote against Amazon in the longer term given their track record of success. However, digital coupons does not seem like to way to change habits. A deeper study on consumer insights and collaboration with doctors offices where the transaction begins, is called for here.
I agree that the BOPIS model has been especially successful for prescription drugs. It’s an industry where many consumers are more comfortable with a brick-and-mortar, in-store shopping experience. Going back in time, though, that same argument was once used successfully for book sales, only for Amazon’s advantages (specifically, their warehouse infrastructure and the ability to provide consumers with conveniences like same-day delivery) to win out. As we saw with the pandemic and the surge in telemedicine services, consumer behavior and expectations have changed.
Amazon’s MO is to take down one category at a time. While Healthcare is a extremely large industry, Amazon is disrupting a small category with a targeted offering for a defined cohort. I’d be watching out for the next category.
Will Amazon‘s “always day one” strategies lead to the company becoming a leading competitor in the healthcare space?
Amazon has evolved into a prolific monolith of a company and has products and services that have pivoted with the times. By following its “Always Day One” Jeff Bezo-inspired philosophy, Amazon has become a force to reckon with across such a diverse assortment of merchandise and extending its Prime benefits beyond just free two-day shipping.
However, Amazon has done an outstanding job in evangelizing when they are entering a new industry, with the most famous one being the grocery industry with their acquisition of Whole Foods. While they have entered the grocery industry and are certainly a competitor with Whole Foods Market and Amazon Fresh, they have yet to dominate or disrupt such a congested competitive landscape. Additionally, the promise of the Amazon Go just walk out capabilities has yet to scale up significantly.
As Amazon executes against its healthcare and pharmaceutical ambitions, they are entering yet another industry ripe for disruption and reinvention. The healthcare industry is highly fragmented, and the customer experience across health insurance, medication, dental, and prescriptions needs to catch up to the leading UX companies. The concept of mobile and digital-first is far from reality.
Amazon can undoubtedly win some of the market share by undercutting the competition and offering discounts on medication. However, the most disruptive change they can lead is to center the healthcare experience around the customer, with a personalized and more seamless experience.