Amazon opened an online pharmacy in the United States on Tuesday to provide prescription drugs, thereby increasing competition with pharmaceutical retailers such as Walgreens, CVS and Walmart.

The new store is called Amazon Pharmacy, which allows customers to compare prices when purchasing medicines on the company’s website or app. Shoppers can switch between their co-payment and non-insurance options at checkout, greatly discounting loyalty club Prime members.

This move is based on the online retailer’s acquisition of PillPack in 2018. Amazon said it will maintain independence for customers who need to pre-pack multiple drugs.

Analysts from Jefferies Equity Research pointed out that in the past two years, Amazon has been trying to get more state governments to ship prescription drugs nationwide, which has been an obstacle to its expansion into the drug supply chain.

The company is an online bookseller that has disrupted the retail, computer, and now possible pharmaceutical industries, and has been criticized by labor groups and legislators along the way.

TJ Parker, CEO of PillPack and vice president of Amazon Pharmacy, said in a statement that the retailer’s goal is to “bring the obsession with customers into an industry that can cause inconvenience and confusion.”

Amazon faces fierce competition from Walgreens Boots Alliance, CVS Health, Walmart, Rite Aid, Kroger and other companies. According to JD Power’s market research, the proportion of drugs ordered online has been very low.

Amazon said that if Prime members prefer to buy in person, Amazon said that discounts for non-insurance purchases apply to more than 50,000 physical pharmacies, including those run by competitors. Amazon said that Inside Rx, a subsidiary of Cigna’s Evernorth, could benefit from it.

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However, this pandemic may help make drug orders online. As governments require people to stay at home to prevent COVID-19, e-commerce has surged this year. Prime members (more than 150 million worldwide) may be willing to accept online drug purchases because it comes from Amazon.

The company said that Prime subscribers can enjoy up to 80% discount on generic drugs and 40% discount on branded drugs without insurance payment and two-day delivery.

A spokeswoman said that Amazon’s online pharmacies are not yet available in Illinois, Minnesota, Louisiana, Kentucky and Hawaii.

© Thomson Reuters 2020


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