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SEATTLE — At a time when brick-and-mortar pharmacies are struggling — closing thousands of stores amid falling profit margins for prescription drugs and eroding market share at the front end — Amazon is reimagining how patients access medications and related services. During the four years since its debut, Amazon Pharmacy has developed a new model intended to leverage the company’s proven strengths in logistics and technology to make filling prescriptions more efficient and, whenever possible, more affordable, while delivering first-rate patient care. For its success in that endeavor and the promise of future innovation, the editors of Chain Drug Review have named Amazon Pharmacy the publication’s e-commerce Health Care Provider of the Year.
A commitment to “starting with the customer and working backwards” is the foundation of Amazon’s success across a broad range of product categories and services, and the principle applies in health care and pharmacy as well. Dr. Vin Gupta, chief medical officer of Amazon Pharmacy and a part-time critical care pulmonologist at Virginia Mason Medical Center in Seattle, has direct experience with the needs of patients and the health care system’s shortcomings.
“What I think Amazon Pharmacy does so well is informed by what I do at the bedside,” he says. “I have that unique perspective of being an intensivist within the four walls of a health system. What I see is the downstream impact of people, for whatever reason, not being able to effectively engage with basic primary care, which has a cascading effect with conditions like uncontrolled high blood pressure.
“Imagine the opportunity we would have if, at scale, we could tell people that they have something wrong with their bodies, that there may be a silent killer like hypertension lurking. We envision Amazon Pharmacy, together with our One Medical clinics, as the vehicle to give them that insight, then marrying that with a simple, navigable, easily discoverable pharmacy experience where you know what you’re going to pay and you know when you’ll get your medication, whether for an acute need or a chronic condition.”
The failure to detect health problems early and start patients on the right course of treatment has long plagued the U.S. health care system. Many would argue that brick-and-mortar pharmacies are better suited to address the issue than their online counterparts. Gupta thinks otherwise.
“We tried that for decades and it didn’t work,” he says. “The status quo is anachronistic and should not be a standard of business moving forward. Patients deserve something better. COVID-19 magnified the fact that we are not good at enabling rapid triage with treatment at scale. That’s where I think virtual tools make a lot of sense.
“Amazon had been innovating pre-pandemic on that set of experiences. Americans have changed their preferences on how they want to consume health care,” adds Gupta, who points out that further advances in at-home diagnostic devises will accelerate the shift. “I’ve seen this firsthand. To the extent possible, if they can get high-quality care at home reliably, then they’re willing to take a chance at that. It’s the convergence of innovation meeting the moment.”
When the time came, the company was ready to move into the prescription drug business. Beginning with the 2018 acquisition of Pillpack, which sorts medications for polychronic patients by the date and time they need to be taken, Amazon systematically applied lessons learned from other parts of its business, resulting in the launch of the eponymous pharmacy two years later.
John Love — a 19-year Amazon veteran who was named vice president of pharmacy and Pillpack three years ago, after working on the retail and technology sides of the business — is bullish about the company’s positive impact on health care. “We’re building products and services that help people improve their health, and there’s nothing more important than that,” he says. “On the pharmacy front, fundamentally our job is to help people afford and get access to products that make their lives better.”
Love, Gupta and their colleagues are building what they call Pharmacy 3.0. The evolving model was developed to address what they see as deficiencies in traditional brick-and-mortar pharmacies and mail-order services.
There are so many complicated edge cases in pharmacy that are quite a bit dated relative to modern technologies,” says Love. “Why can’t you see the price of an item that you’re consuming? In almost anything else we do in our lives, you get to know the price of the thing that you’re looking for. But in pharmacy, you might have to wait in a line for 20 minutes in a public setting to hear the price and then learn whether you can afford it or not.
“What inspires us is inventing a third type of pharmacy. You have retail pharmacy, which is very predictable. All of the burden is on the patient, who has to work around the store’s hours. The patient has to drive, park, wait and potentially talk about a private health concern in a public space.
“Delivering medications isn’t new. We’ve had mail-order services in the United States for decades, but they haven’t evolved and are very feature light. They don’t have savings programs to any great extent. And the delivery time has stagnated at five to 10 days. At Amazon, five to 10 days feels like a lifetime — particularly for medication where you might start feeling better after taking one dose.”
Armed with an understanding of those pain points, Amazon set out to reinvent the pharmacy experience.
“Our vision is the store’s in your pocket,” explains Love. “You engage with the pharmacy 24-7, including consultation with a pharmacist, whenever it’s convenient for you. We don’t mind if your kids have a soccer game or you’re working odd hours or a second job. You can pop into Amazon Pharmacy, you can see the medication, you can learn about it, and understand the price and what you’ll pay. Medications are delivered privately and reliably to your doorstep, so you don’t have to go out and can save time. It sounds simple, but it’s super powerful. We already see that that’s improving access and adherence.”
Amazon’s new model is resonating with a growing number of consumers. In J.D. Power’s annual pharmacy study, Pillpack and Amazon Pharmacy ranked first and second, respectively, in the mail-order segment. And a recent report by Evercore found that 45% of consumers are interested in the prospect of obtaining prescription medications from Amazon, which the financial services firm estimates generated $2 billion in pharmacy sales in 2024.
Gupta points out that the attitude of health care providers is equally important to the success of Pharmacy 3.0. Amazon has made it a priority to reach out to physicians and other clinicians who have prescribing authority.
“Our hypothesis is that if we can guarantee an experience which we know we’re good at delivering and apply that to the pharmacy space — focusing on speed, price transparency and making sure people are paying the lowest cost possible — we have a magic combination that patients will appreciate. That experience will also translate into something meaningful from a clinical outcomes standpoint downstream. We’re seeing signs of it.
“The challenge here is how do you convince providers to take a look, because often patients will take their advice. Unless we can convince providers that, one, this is a different kind of pharmacy experience, not the experience that maybe you trained with, and that, two, this is not just another point solution or an innovative tool that people talk about. They need to know that there is a direct correlation between what we’re doing and what it means for the patient’s health.
“We need to make our case based on data and return on investment. If we can’t give providers a clear data story on why this can help improve clinical outcomes, then we’re just another point solution.”
Pharmaceutical manufacturers are also taking note of Amazon’s capabilities. The company last year was chosen by Eli Lilly to power its direct-to-consumer program. The new online service will include treatments for such conditions as diabetes, migraine and obesity, along with telehealth support.
As more health care stakeholders reevaluate attitudes toward pharmacy ingrained over decades, Amazon is ramping up growth. Last October, the company announced plans to begin offering same-day pharmacy service in 20 additional cities this year. Expanding at the rate of one new pharmacy facility every 18 days, it will double the number of metropolitan areas where customers have access to expedited delivery.
“We’re building on the back of Amazon innovation,” Love says. “Coming out of COVID, Amazon overhauled a lot of our supply chain and logistics capabilities to position products closer to customers, and what that enables is waves of delivery throughout the day. So you can get delivery in maybe a few hours versus a couple of days. What we’ve done is build a fully functional pharmacy as a module within our sub-same-day fulfillment centers, putting medications and clinical teams closer to customers that dramatically improve speed.
“These are smaller than our regional pharmacies, which can ship and have capabilities to cover the entire U.S. We’ve got sub-same-day sites running in greater Los Angeles, Orlando and 10 other major markets. What we want to do is increase speed and access for every U.S. life. That’s the motivating factor.”
Helping customers save money is another important service on offer. Amazon Prime members receive up to 40% off on branded medications and up to 80% off on generics. The RxPass program provides unlimited access to 60 commonly used generic medications for a flat fee of $5 per month. And pharmaceutical manufacturers’ coupons for applicable medications are automatically applied when filling a prescription.
With the ongoing buildout of Pharmacy 3.0, Amazon has given patients and their caregivers another viable option for accessing prescription medications and related care. It has also served as a catalyst for other pharmacy operators to rethink their current business model. The ongoing dialogue should elevate the performance of companies that take the challenge seriously and raise the bar for the entire pharmacy industry.
