Tag: pharmacy

Will Amazon Pharmacy Disrupt Rx?

Healthcare

5 Myths and What Amazon Pharmacy Will Mean For Your Wallet

Photo by Joshua Coleman on Unsplash

Let’s cut through all the confusing pharmacy jargon and get to the big idea-Amazon is not doing anything fundamentally different in the prescription drug space…yet.

In November 2020, Amazon Pharmacy entered the world of prescription drugs-this is a market sized in excess of $500 billion in the United States. The Amazon Pharmacy benefit is being offered to all 126 million Amazon Prime members, in addition to their many other member perks such as free 2-day shipping and online streaming of Amazon Video.

The benefit of Amazon Pharmacy to Amazon Prime members is the promise of 80% off generic drugs, 40% off brand name medications, as well as a savings card that can be used at up to 50,000 brick and mortar pharmacies including CVS, Walgreens and Walmart. You can compare prices both with and without insurance at checkout. In some cases, Amazon Pharmacy could make your out of pocket cost for a prescription lower than when using insurance. Amazon says it works with most insurance plans.

Sounds pretty amazing, right? There’s a big caveat here: this is not fundamentally different from what some other players are doing in the prescription drug space. In fact, this model is exactly the same as what Good Rx does. What’s more, it is so similar to Good Rx that the two companies launched using the exact same partner to administer their prescription discount program-Inside Rx (Inside Rx is owned by Express Scripts, and is a subsidiary of Cigna’s Evernorth). Yes, hiding within Amazon Pharmacy are all the usual players to ensure Amazon can play the prescription drug game by the rules, be able to work with 3rd party payers and to keep prices competitive.

So let’s look at some assumptions which are actually myths about Amazon Pharmacy.

  1. Amazon’s dive into pharmacy has disrupted the prescription drug market

For now, Amazon has just “entered the ring,” and disruption has not happened yet. There is currently nothing they are doing that is fundamentally changing the prescription drug market other than accessing their 126 million Amazon Prime members and offering this option as an additional benefit. While what they are doing in the prescription drug space is not substantially different from other players in the market, the mere fact that Amazon is the leader in distribution logistics with an already impressive nationwide U.S. household brand saturation positions them to have a high potential to disrupt the prescription drug market in the future.

2. Amazon Pharmacy’s goal is to make prescriptions more affordable for uninsured Americans

Unfortunately this is not the exact problem Amazon Pharmacy is solving right now. Keep in mind this benefit is only available to those who are paying $119/year for their Amazon Prime membership. To take this further, according to Ge Bai, Associate Professor at John Hopkins Bloomberg School of Public Health, the relatively small number of uninsured patients as a market do not have enough clout to be a viable business model for Amazon. Cash buyers make up less than 5% of the overall retail prescription spending. Amazon is targeting customers who have commercial prescription coverage (usually through employers) and people covered through Medicare-combined, these groups make up 79% of retail prescription drug spending. While not exclusively targeting the uninsured, Amazon Pharmacy is certainly providing a consumer-friendly option for cash buyers to buy prescription drugs.

3. Amazon Pharmacy is going to fix out-of-control prescription drug prices in the U.S.

Not exactly. Amazon Prime members will be able to enjoy lower prices on some drugs, however these discounts are still covered by the same PBMs who are covering the very high cost of drugs in the first place. What Amazon Pharmacy is doing is offering value to their members through price transparency and making it easier for Prime members to price compare the cost of medications paying cash versus using their insurance coverage. They are offering convenience to Prime members with quick and reliable shipping, and perhaps more competitive prices on select drugs, but they are not currently tackling the underlying runaway drug pricing issue in the U.S..

4. Amazon Pharmacy’s prices will be the cheapest prescription prices available

This will not always be true. It appears that Amazon Pharmacy is aiming to make drug prices competitive for some popular drugs such as Humira, Metformin, and Januvia, however other medications could be more expensive than competitors. To illustrate this price variability, Dr. Eric Bricker has done a nice job illustrating price comparisons between Good Rx and Amazon Pharmacy. His analysis shows that Amazon and Good Rx prices vary by drug, and neither company could be blanket dubbed to always be “the cheapest option.”

Source: YouTube AHealthcareZ — Healthcare Finance Videos

5. Amazon Pharmacy will cut out Pharmacy Benefit Managers (PBMs) such as CVS Caremark, Express Scripts and Optum Rx

This is not the case. While Amazon Pharmacy is new on the prescription drug scene, they need to play by the same rules to navigate the complexity of the prescription drug market in the U.S.. Keep in mind Amazon Pharmacy is using Inside Rx to administer their prescription discounts; they are working within the PBM model, so they are not currently doing anything to drastically change the system people currently use to get their prescription drugs. And because the largest portion of prescription drug spending comes from commercial payers and Medicare, maintaining the ability to effectively deal with 3rd party payers is needed to enable people to access their coverage when they order medications from Amazon Pharmacy.

Amazon’s Challenge in Rx: Behavior Change

Amazon Pharmacy is looking to bring convenience and more transparent pricing to Amazon Prime users by offering free, 2-day delivery for medications at scale. It is useful to note here that there is one nut Amazon needs to crack to truly become disruptive in the prescription drug space- behavior change.

Mail order pharmacy, while long understood to be convenient and in some cases less expensive for some medications, in 2019 it made up roughly 5%of the prescription drug market. Even in light of the pandemic over the past year when people have limited their trips outside of their homes, it is still unknown whether the use of mail order prescriptions will see a sustained increase in the future.

What are the barriers to more Americans using mail order pharmacy? First mail order pharmacy does not fit in to “the way things have always been.” Right now, most doctors prescribe your medication and send it directly to your local retail pharmacy for same-day pickup. This is the default way many people are getting new prescription medications right now. Also, it is important to note the high proportion of people on Medicare who are using multiple prescription drugs on an ongoing basis. This population has had the lowest penetration by Amazon Prime, and may be less apt to seek alternate methods for getting prescriptions. An additional barrier is that people over age 65 may be less digitally savvy to go online to switch to mail order prescription fulfillment.

With Change Comes Opportunity

Before they are able to disrupt the prescription drug market in the United States, Amazon Pharmacy currently faces the difficult task of changing consumer behavior with respect to how people get their prescription drugs. However, looking beyond today and in to the future, there is new potential on the horizon. As American health care takes on a new trajectory under the Biden administration, Amazon Pharmacy could be poised to respond to the new opportunities that change and health care reform may bring.

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Originally published at https://www.linkedin.com.

The Future of Healthcare is 3 Letters: CVS

Healthcare

There’s a lot of speculation surrounding CVS’s acquisition of Aetna that’s planned for 2018. But one thing we know for certain is that CVS’s direction in 2018 will make an enormous imprint on healthcare in the U.S. as we know it. 

On December 3, CVS announced their agreement to acquire Aetna, the nation’s 3rd largest insurer, for $69 billion. To put the sheer magnitude of a deal like this into perspective, this deal would be the largest in the history of health insurance. CVS is currently a Fortune #7 company with an annual revenue of $177.5B; Aetna is #43 on Fortune’s list with an annual revenue of $63B. According to the current Fortune 500 list, the merged CVS/Aetna would have the 2nd highest annual revenue, second only to Wal-Mart. 

CVS has expressed the desire for this acquisition to improve the integration of patient care, and to provide higher quality care at a lower cost in “communities, homes and through the use of digital tools to support health.” CVS’s President and CEO Larry Merlo communicated the desire to put customers “at the center of health care delivery.” The intent would be to leverage CVS’s 9,700+ retail stores and 1,100 Minute Clinics to create community-based centers that include resources for wellness, medical, pharmacy, vision, hearing and nutrition services. And the touted benefit of acquiring Aetna is that integrated care and higher negotiation power for pharmaceutical drugs is the key to lowering costs. 

This deal is projected to happen in the second half of 2018. At this point, it is unknown whether the acquisition will face anti-trust opposition. While vertical mergers (which combine 2 companies which are not direct competitors) don’t traditionally get blamed for stifling competition, CVS’s announcement comes on the heels of the Justice Department’s block of AT&T’s takeover of Time Warner, citing the acquisition would create “too powerful of a content company.” And with 2 recent horizontal healthcare deals halted for antitrust reasons (Aetna/Humana and Anthem/Cigna), CVS’s Aetna deal will need to pass through close scrutiny in Washington before the deal can be finalized.  In October, Trump declared  “My administration will…continue to focus on promoting competition in healthcare markets and limiting excessive consolidation throughout the healthcare system,” though many are betting that this vertical deal will go through with only the requirement of some concessions by CVS and Aetna. 

My predictions for 2018? One of two things will happen.

Possibility #1: Regulators block CVS’s Aetna acquisition

What is to stop regulators from saying that this deal will create “too powerful of a healthcare company?” This is indeed a possibility, albeit one that many think is unlikely. But in this past year alone, the Federal Trade Commission blocked Walgreens’ purchase of Rite Aid, while the Justice Department intervened to prevent Aetna’s acquisition of Humana and the Anthem/Cigna merger. While these were considered horizontal deals among competitors, the Department of Justice blocked these deals because they would drastically restrict competition and “fundamentally reshape the insurance industry.” Would the CVS/Aetna deal not also do the same thing?

If this acquisition is blocked, it signifies that the regulatory tide could be changing with respect to how the largest players in healthcare can evolve. With the “big five” insurers, which cover approximately 90% of all commercially insured Americans, unable to strategically gain market share through jumbo mergers and acquisitions, this opens up the door for new entrants into healthcare markets who are better at solving healthcare’s problems than their behemoth counterparts. It also encourages existing competitors to home-grow solutions in their organizations rather than joining forces with outside partners.

Possibility #2: CVS’s Aetna acquisition moves forward in 2018

Let’s imagine for a moment that the deal does go through as planned.  The likely next step is that Express Scripts, the only other big PBM not owned by an insurer, will merge with a health insurer like Humana, and may even buy its own pharmacy chain such as Walgreens. This trend would change the landscape of healthcare, giving all power to a few vertically integrated giants, and putting any smaller PBMs or insurance companies at a crippling competitive disadvantage.  

CVS’s vision of transforming local retail stores into community health centers where people can not only pick up prescriptions, but also see a doctor, talk to a nutritionist, or receive vision care is a compelling evolution of the way we seek self-care. This type of model could be the answer to the convenience that people want with telemedicine, but it breaks down the barriers to full adoption by putting a community-based centralization on the care they receive.

As we consider these two possibilities, we should ask some big questions. 

  1. Do companies become more innovative when they get bigger?
  2. Do competitive moves like this help to fight the steadily rising costs of healthcare?
  3. Will this improve the quality of care that people receive?

Whether 2018 is the year that the CVS/Aetna merger moves forward, or whether 2018 is the year that the CVS/Aetna deal is blocked, either way will lead to a crossroad that will signify the next evolution for healthcare in America. The promise of the benefits to consumers—transforming retail stores into hubs for health services and potentially better prices as a trickle-down benefit from improved negotiation power with pharmaceutical manufacturers—paint a compelling picture for what the future of American healthcare could be. Only time will tell whether consumers will be the winner in this deal, whether the winner will be the shareholders, or whether we’ll never get to find out.

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BetaXAnalytics is a healthcare data consulting firm that helps payers and providers to maximize their CMS reimbursements and helps employers to reduce their healthcare spending through proven strategies to contain costs. For more insights on using data to drive healthcare, pharmacy and wellbeing decisions, follow BetaXAnalytics on Twitter @betaxanalytics, Facebook @bxanalytics and LinkedIn at BetaXAnalytics.

3 Simple Ways Companies Can Help Employees with Addiction

Healthcare

After struggling with pain from severe headaches, Michele Zumwalt turned to her doctor for help. He prescribed Demerol to manage the pain. But soon after starting treatment, Michele noticed that she started having headaches if she didn’t have her medication. Over the next several years, what started as a way to manage chronic pain turned into a full-blown addiction to painkillers. Working in corporate sales, she recounted putting on entire presentations for clients and not even remembering the conversations. What’s more, her clients did not notice her silent addiction. Now sober for over 12 years, Zumwalt wrote of her experience in a book about recovery called Ruby Shoes.

In 2017, what was once a problem that we thought was far from our homes and offices now affects our families, our coworkers, and our communities. Drug overdose is now the leading cause of accidental death in the U.S., according to the Department of Health and Human Services. Since 2000, the rate of opioid overdose deaths has more than doubled, and the cost of inpatient hospitalizations due to overdose since 2002 has nearly quadrupled. And because of the highly addictive nature of painkillers, addiction has no prejudice. It affects people from all walks of life, including seniors, celebrities, teens, professionals and newborns.

For too long we’ve viewed drug addiction through the lens of criminal justice. The most important thing to do is reduce demand. And the only way to do that is to provide treatment — to see it as a public health problem and not a criminal problem. ~President Barak Obama

Opioid addiction is an epidemic, and it touches the workplace with the same pervasive force. Opioid abuse costs employers approximately $12 billion annually. A 2016 study by Castlight Health found that 1 out of every 3 opioid prescriptions covered by employers is abused, and that painkiller abusers cost employers nearly twice as much ($19,450) in medical expenses on average annually as non-abusers. Opioid addiction is rarely discussed in the workplace, and those affected tend to be very good at hiding their addiction. But there are some simple steps employers can take to help to address opioid use and dependence.

1. Understand the impact. A look into a company’s own health data is the first step is to understanding how exactly opioid use affects their employees. Understanding how painkillers are being prescribed, when opiates result in emergency treatment and the correlation to absences and workers compensation claims helps to quantify the problem for a company. Understanding the scope of the issue informs decisions on a written drug-use policy, whether to do employee drug testing and what drugs to test, how to educate managers and staff, and how to best provide resources to help employees and their families.

2. Reduce the stigma. Most employees struggling with addiction are doing so in silence. They may fear losing their job, and they have developed all sorts of strategies to hide their addiction from their families, friends and coworkers. Employers can play a key role in leading the charge to normalize the discussion on addiction. By helping to lead the conversation in educating employees on opioid use and addiction resources, they can help break the barriers that prevent people from recognizing dependence and seeking treatment.

3. Open access to treatment resources. When companies understand how addiction is impacting their employees and their health costs, they are well-positioned to match member needs with necessary addiction treatment services. These companies may find that they need tools beyond the traditional employee assistance program, as they open access to treatment centers and other helpful tools to support people through recovery. By making data-driven decisions, opening access to resources, and communicating with members, companies can further remove the barriers that keep people from seeking treatment.

It’s hard to believe that Nancy Reagan’s “Just Say No” campaign for the War on Drugs began over 30 years ago. In those days, we imagined the detectable dangers of drugs as dealers hanging out on playgrounds, giving out drugs to kids like candy. But today in 2017, the danger that faces 20.5 million Americans is much harder to recognize. Many addictions aren’t born on street corners; they start in the doctor’s office. And whether an employer chooses to address the epidemic or not, they have co-workers who wake up and face a life driven by addiction every day. Isn’t it time we as employers become part of the solution?

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About BetaXAnalytics:

BetaXAnalytics uses “data for good” to improve the cost and quality of health care for employers. By combining PhD-level expertise with the latest technology, they help employers to become savvy health consumers, saving health dollars and better targeting health interventions to keep employees well.

Follow BetaXAnalytics on Twitter @betaxanalytics, Facebook @bxanalytics and LinkedIn at BetaXAnalytics.

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