Amazon Opens Online Pharmacy

“The news represents a disruption to the system and competitive threat that will likely shift scripts away from the retail channel.”
Lauren MuskettNovember 17, 2020

Amazon is launching an online pharmacy business that will allow customers to order prescription medications for home delivery.

The online retail giant said its Amazon Pharmacy offering will allow patients to transfer prescriptions from existing retailers or have their doctors send documents direction to Amazon.

“We work hard behind the scenes to handle complications seamlessly so anyone who needs a prescription can understand their options, place their order for the lowest available price, and have their medication delivered quickly,” T.J. Parker, vice president of Amazon Pharmacy, said.

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The announcement sent shares of CVS Health Corp. down 7.5% Tuesday morning. Shares of Walgreens Boots Alliance fell more than 8%, while shares of Rite Aid fell more than 16%. GoodRx shares fell more than 18%.

In June 2018, Amazon bought the online pharmacy PillPack for $753 million after announcing it was forming a healthcare venture with Berkshire Hathaway and JPMorgan Chase. Parker was a co-founder and chief executive officer of PillPack.

Amazon Pharmacy uses PillPack’s pharmacy software, fulfillment centers, and relationships with health plans. It will also offer discounts to Amazon Prime customers at Costco, CVS, Walgreens, Walmart, and other stores.

Amazon said it has tools to verify prescriptions were legitimate and reduce fraud potential. It will not deliver Schedule II controlled medications, including most opioids.

“The news represents a disruption to the system and competitive threat that will likely shift scripts away from the retail channel,” analysts at Citi Research said in a note.

The COVID-19 pandemic has prompted many consumers to turn online to order medicines.

Over the summer, Walgreens CEO Stefano Pessina told analysts that the company has seen “unprecedented demand” for its online and delivery business. Walgreens offers delivery services through a partnership with FedEx.

The offering will be available in 45 states starting this week. Amazon said it expects to start serving Hawaii, Illinois, Kentucky, Louisiana, and Minnesota eventually.