More than two years after Amazon Pharmacy’s announcement to pull some of its prescription drug business away from major (and smaller) drugstores, Amazon is launching a new product to expand its reach in the space. Today he pulls the cloths off RxPass, a service where Prime users in the US can pay a $5 monthly flat fee to get as many generic versions of drugs as they need. Amazon said the service will initially cover generic drugs for 80 common conditions — they include, for example, Losartan (the generic for the hypertension drug Cozaar) and Sertraline (the generic for the antidepressant Zoloft) and hair growth pills — and it wouldn’t comment on its plans to expand the list.
The 80 conditions have been selected, as it were, to make the offer attractive to a broad group of potential customers. Dr. Vin Gupta, Amazon Pharmacy’s chief medical officer, said more than 150 million people in the US are already using one or more of the drugs in the RxPass offering.
In addition to RxPass (not to be confused with another healthcare for B2B called RxPass) only available to US Prime users – another sweetener for Amazon’s membership level that started with free shipping but now nets services like entertainment, grocery services, etc. to attract repeat business – RxPass is not open to people with government medical plans like Medicare or Medicaid (Amazon Pharmacy is a provider of these and therefore cannot offer directly). One pays the $5 out of pocket, not on insurance. You sign up for this in your app as a Prime user, under Pharmacy.
This is a big and quite bold move for Amazon. $5/month is the fee regardless of the amount a customer orders, which means the service is aimed at those who are currently already paying more than this per month for their medications for these 80 conditions, or think they might over time have to pay more, or are looking for one-stop services with monthly predictable costs.
Indeed, as with many other services on Amazon’s platform, that promise of convenience has been carefully weighed against pricing, in this case also playing on a shortcoming in the market and healthcare in particular.
On the one hand, there are the fundamental problems and pitfalls of systems like those in the US that rely on health insurance to operate, and are generally very expensive regardless of users, even with those plans, causing many to forego what they need. (This isn’t the only health problem in the US, of course, but a big part of preventive and chronic care.)
“Navigating insurance can be a maze and get there the pharmacy a burden,” writes Gupta. “Sometimes that has led to bad results: new medicines are not filled, refills are not are arrested and patients suffer.
On the other hand, the conveniences and cost benefits of the Prime service are put to work to fill that gap.
“Prime members already get fast, free delivery of prescription medications, and RxPass is another way to save with Amazon Pharmacy. Any customer who pays more than $10 a month for their eligible medications will see their prescription costs reduced by 50% or more, plus they save time by skipping a trip to the pharmacy,” said John Love, vice president of Amazon Pharmacy, in a statement “We are excited to offer our customers surprisingly simple, low prices for the eligible medications they need each month.”
Amazon wouldn’t disclose how it got to $5 or whether that’s a subsidized figure to attract more users, but data published last year by health policy researchers KFF, citing figures from the OECD, noted that in the US in 2019 annually per capita. cash payments for prescription drugs averaged $164 per year. This isn’t a direct comparison, as this isn’t a figure that covers 80 ailments, but it’s the average, which gives an idea of what’s being spent around the most common ailments Amazon targets as well.
The goal is also to bring in users for Amazon Pharmacy, which will provide medicines for all other conditions. The larger service also offers discounts on generic and non-generic drugs (up to 80% and 40%, respectively, Amazon says).
For years, Amazon has seen the opportunity to do more in healthcare, by buying startups and launching new services and products for them. These include acquisitions of online pharmacy PillPack in 2018 and first-line technology platform OneMedical for $3.9 billion in 2022. And in addition to launching Amazon Pharmacy in 2020, it launched a telehealth service called Amazon Clinic last year. This was the company’s second foray into telehealth after mothballing Amazon Care (a service for its own employees). The OneMedical deal is still making its way through regulatory approvals, but in the meantime, this latest launch of RxPass underscores the company’s intent to stick with it despite the company’s broader restructuring and 18,000 layoffs currently underway .