Who’s Afraid of an Amazon-PillPack Merger?

These days, everyone’s talking about adherence. Amazon’s pending acquisition of PillPack didn’t start this conversation, but the retail giant has certainly increased its volume… and it’s urgency. 

At RxSafe, we talk to a lot of independent pharmacy owners, and their reaction has been mixed. Here are a few observations we’ve heard, in no particular order.

What the Cynic Says 
Amazon overpaid. Jeff Bezos made this purchase mostly to anger his chief rival, Walmart. Once Bezos finds out how difficult the pharmacy business is, he’ll quickly lose interest and PillPack will be sold off a few years down the road at a big loss. But who cares, when your trillion-dollar company can simply write it off? Yawn.

What the Worrywart Says
This is just another nail in the coffin for independent pharmacy. We can’t compete with Amazon’s scale, ad budget and cost-cutting abilities. They’ll drive us out of business because nobody values personal relationships anymore. Consumers just want their stuff as quickly and cheaply as possible. Woe is me!

What the Opportunist Says
Hey Amazon, thanks for the free advertising! When my customers see all the hype about PillPack they’re going to come through my doors and ask me if I can give them a nice little box with a 30-day supply of neatly sorted meds, just like they saw on TV. I’ll launch my own strip packaging business, which will go through the roof. My market share will grow, my star rating will increase, and reimbursements will improve. The best is yet to come!

So, Who is Right About the Amazon-Pillpack Merger?
Only time will tell.

To add fuel to the fire, here’s some news: according to a survey released this week, 85 percent of Amazon Prime members said they are open to purchasing drugs directly from Amazon.com. That’s a big number, and perhaps not surprising, but it does give one pause. Another thing we’ve heard from multiple pharmacies is that PillPack is targeting new business by going through patients’ insurance companies to transfer individuals to their adherence platform.

As we’ve stated before: be aware. If you get a call to transfer a prescription, always call the patient to confirm that the request came from them.

Below is some specific advice for our friends.

To readers who are on the cynical side: let’s not write off Amazon just yet. After all, the company has a history of starting small, testing the market and fine-tuning its service, before launching a full-fledged commercial operation. If they’re serious about pharmacy, they’ll take great pains to learn the business, they’ll make adjustments to leverage their size and reach, and they could potentially have a huge impact.

For those who might be worrywarts: don’t panic. Remember, even though Amazon reportedly paid $1 billion for PillPack, the company’s revenues this year are just shy of $100 million. In terms of market share, that’s only about 25 hundredths of 1 percent of the $400 billion pharmacy market. Stated another way, if you considered the market size to be a mile long, PillPack has gone about 1 foot. Conclusion: Amazon/PillPack isn’t going to put you out of business tomorrow.

Finally, for the opportunists out there: We admire your pluck. And, we think you’ve got the right idea and the right attitude. However, don’t fall in love with the first “shiny object” that you see. There are major differences between adherence solutions and automation options, not to mention your own unique needs and customer base. Shop around! This is most certainly not a “one-size fits all” endeavor.

None of us has all the answers. But if you’re considering an adherence solution, here are some questions we strongly recommend you ask:

1. Would my patients be better served by blister cards or strip packaging? What are the pros and cons of each approach?

2. What are the economics of purchasing or leasing an automation solution?
     a. Cost of acquisition (do you need to buy cassettes or additional inventory?)
     b. Vision inspection (built-in, automated, manual?)
     c. Consumables costs (paper, ink, variable pouch length?)
     d. Maintenance costs (whole system or each part?)
     e. Fill labor (tech production and pharmacist verification)
     f. Speed of production (completed jobs per hour, on-demand?)
     g. Rework necessary (how much, how often?)

3. Can I easily integrate OTC into my adherence program?

4. How am I positioned to market an adherence program? Can my vendor help?
     a. Increasing awareness and demand in my market
     b. Branding, package design
     c. Google/Facebook ads
     d. Website, video, audio, email marketing
     e. Posters, bag stuffers, door hangers etc.

As you can see, there’s a lot to research, plan and prepare. Amazon is set to finalize its purchase of PillPack by the end of this year. Are you ready?

For more information about RxSafe, you can head to their website at www.rxsafe.com and you can see them in person along with all of their great technology solutions at the biggest independent only pharmacy conference every year – the PDS Super-Conference. When you attend the PDS Super-Conference not only do you get 3 days of proven, actionable programs from the stage, you get to interact up close with world-class exhibitors. The exhibitors at the PDS pharmacy conference have been vetted and are guaranteed to help your pharmacy operations. We even have some that only come to the PDS Super-Conference! For more information on the most impactful pharmacy conference head to www.pdsconference.com.