More than two years since announcing Amazon Pharmacy to take some of the prescription drugs business away from big (and smaller) drug stores, Amazon is launching a new product to expand its reach in the space. Today, it's taking the wraps off RxPass, a service where Prime users in the U.S. can pay a monthly flat fee of $5 to get as many generic versions of medications as they need. Amazon said that initially the service will cover generic drugs for 80 common ailments -- they include, for example, Losartan (the generic for the hypertension drug Cozaar) and Sertraline (the generic for antidepressant Zoloft) and hair-growth pills -- and it would not comment on its plans to expand the list.
The 80 conditions were selected, so to speak, to make it an offer attractive to a wide base of potential customers. Dr. Vin Gupta, the chief medical officer of Amazon Pharmacy, said that more than 150 million people in the U.S. already take one or more of the medications in the RxPass offering.
In addition to RxPass (not to be confused with another healthcare service for B2B called RxPass) only being available to U.S. Prime users -- one more sweetener for Amazon's membership tier that started with free shipping but now nets services like entertainment, grocery shopping services, etc. to attract repeat purchasing -- RxPass is not open to people on government medical plans like Medicare or Medicaid (Amazon Pharmacy is a provider for these and thus cannot offer it direct). One pays the $5 out of pocket, not on insurance. You sign up for it in your app as a Prime user, under Pharmacy.
This is a big and pretty bold move for Amazon; $5/month is the fee regardless of the amount a customer orders, meaning the service is aimed at those who are currently already paying more than this per month for their meds for these 80 conditions, or think that they might over time need to pay more, or are looking for one-stop services with a predictable cost each month. It also competes with a few other things also brewing in the market: namely, Mark Cuban's Cost Plus Drugs effort.
Indeed, as with a lot of other services on Amazon's platform, it's balanced that promise of convenience carefully against pricing, playing in this case also on a shortcoming in the market and specifically in healthcare.
On one hand are the basic predicaments and pitfalls of systems like those in the U.S. that rely on health insurance to operate, and generally are very expensive regardless for users even with those plans, leading many to forego getting what they need. (This is not the only problem with health in the U.S. of course, but a big component of preventative and chronic care.)
"Navigating insurance can be a maze and getting to the pharmacy a burden," Gupta writes. "Sometimes that has led to poor outcomes: new medications don’t get filled, refills don’t get picked up, and patients suffer."
On the other hand are the conveniences and cost benefits of the Prime service being put to work to fill that gap.
“Prime members already get fast, free delivery on prescription medications, and RxPass is one more way to save with Amazon Pharmacy. Any customer who pays more than $10 a month for their eligible medications will see their prescription costs drop 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 pricing on the eligible medications they need each month.”
Amazon would not disclose how it arrived at $5 and 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 U.S. in 2019, annual per-capita out-of-pocket payments for prescribed medicines annually averaged $164. This is not a direct comparison, as this is not a figure that covers 80 conditions, but it is the average, giving an idea of what is spent around the most common conditions that Amazon is also targeting.
Its aim also is to net in users for Amazon Pharmacy, which will provide meds for all of the other conditions. The bigger service also provides discounts on generic and non-generic meds (up to 80% and 40% respectively, Amazon says).
Amazon has been eyeing up the opportunity to do more in healthcare for many years, buying startups and launching new services and products in aid of that. These have included acquisitions of online pharmacy PillPack in 2018 and primary care tech platform OneMedical for $3.9 billion in 2022. And in addition to the launch of Amazon Pharmacy in 2020, last year it launched a telehealth service called Amazon Clinic. This was the company's second attempt at 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 keep at this, despite the wider restructuring and 18,000 layoffs at the business that are currently underway.