Before beating PBMs, Amazon will have to join them first: Pharmacy CEO
Amazon’s planned acquisition of online pharmacy PillPack may not be nearly as disruptive to pharmacy benefit managers as many industry observers seem to think, according to Alison Wistner, CEO of UpWell Health, a Salt Lake City-based concierge style pharmacy for people with chronic conditions.
Rather than shake them up, Amazon is far more likely to partner with them — at least in the short run, she says.
The powerful PBMs not only represent hundreds of millions of patients and hundreds of billions of dollars of revenue but have strong lobbyists in Washington blocking changes to healthcare laws and legislations that could hurt them.
“I think that a partnership strategy would make sense out of the gate for Amazon,” she says.
Wistner notes that PillPack has existing relationships with all of the major PBMs, including Express Scripts and CVS Caremark, thus making it possible for Amazon to sign up new customers that are under a benefit plan managed by those PBMs.
Amazon might also have no choice but to partner with PBMs to overcome a tricky billing issue. In transitioning over to the health insurance space, Amazon’s revenue dollars from medications would come from consumers’ PBMs and not directly from the consumers as is the case with the retailer’s popular Amazon Prime membership service.
“Unless an Amazon consumer pays for medications without using their insurance card, PBMs would be involved in any transaction,” Wistner says.
PBMs of course might not be interested in partnership opportunities, fearing the loss of business to a potential new rival, according to industry analysts.
Wistner spoke to Employee Benefits Adviser about the strategies Amazon may pursue in working with PBMs. Below are edited excerpts of the interview:
Employee Benefit Adviser: Many observers say the Amazon/PillPack deal might threaten pharmacy benefit managers. Will it disrupt the way PBMs conduct business?
Alison Wistner: Not in the short term because PBMs are so large and very powerful players within the healthcare ecosystem and they are in the midst of a lot of consolidation right now with large health plans. I don’t know that Amazon would disrupt. I think that they would look for partnership so they can work with the existing members of those PBMs or the patients that are covered by those PBMs.
EBA: How might Amazon partner with PBMs?
Wistner: PillPack has existing contracts with all of the major PBMs, so they have an opportunity to roll that out to a broader audience. If they can preserve those relationships, they could think of a more powerful partnership where if someone is an Amazon Prime member who also has health insurance with a PBM, they could bring all of those together in a new and different way.
EBA: What are some of the ways in which they might team up?
Wistner: Either Amazon partners with PBMs, as does PillPack, and adjudicates claims on behalf of the PBMs or they get a broader in-network pharmacy status with the PBMs to get direct business, rather than direct to Amazon customers. Or they build relationships with employers, plans and drug manufacturers and build their own PBM.
EBA: How would Amazon go about a roll-out to a broader audience?
Wistner: A lot has to do with the tremendous loyalty and brand experience that comes with an Amazon shopper and Amazon Prime member. Someone who is already a frequent shopper could very easily transact online. And if Amazon can facilitate a way to upload their prescription online, then that person could very easily expand their shopping cart to include some of the prescriptions that they take on a regular basis.
EBA: How do you see Amazon’s entry into the pharmacy business? Is it a positive development for consumers?
Wistner: It’s a very positive development. They are very good at customer experience and what healthcare needs is more consumerism and having consumers have more access into how drugs are priced and have easier, more convenient access to the medications they take on a regular basis. I think Amazon getting into this market through PillPack will create a better dynamic for that and a little bit more control for the consumers.
EBA: Will Amazon’s foray into the pharmacy business lead to better prices and services?
Wistner: I think it could potentially bring down drug pricing or at the very least create more transparency about drug pricing to the customer. As the situation evolves over time, I do think Amazon could create better relationships with the drug manufacturers and pharma brands to have a very direct supply-chain relationship and ultimately given the scale of Amazon that could bring down pricing as well.