Health

Is Amazon Going Into The Health Care Business?

| by Michael Allen
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Amazon is reportedly showing interest in entering the health care field, which is making some in the health care industry nervous.

"I get asked all the time what Amazon is doing," Tom Rodgers, managing director of McKesson Ventures, told CNBC. "Everyone in the supply chain is nervous. It's a low-level paranoia that Amazon will drive down profitability."

McKesson is a medical distribution giant that could be a target of Amazon.

"I would expect a marketplace of sorts for consumers to choose a doctor or service, and schedule it," Rodgers added.

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If that is Amazon's goal, then the e-commerce giant would be in competition with, or might get into a partnership with, other consumer health tool companies such as Castlight, GoodRx, Teladoc and Zocdoc.

If that were to be successful, Amazon might get into pharmaceutical distribution, according to Rodgers.

"I wouldn't be surprised to see them partner with a pharmacy home delivery company first and let them deal with the regulation and operating burden," Rodgers said. "Only after they prove they can deliver demand, then [Amazon could] make their own investments."

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CNBC reported in May that Amazon began selling medical equipment and supplies in the U.S., and was staffing up its "professional health care program" to make sure that it met regulatory requirements.

Mark Lyons, a Premera Blue Cross executive, was hired by Amazon in March and reportedly began building an internal pharmacy benefits program for Amazon workers; Amazon would not comment at the time.

The Japan Times noted in April that Amazon.co.jp began selling drugs that require a pharmacist consultation.

Amazon customers in Japan fill out a form on Amazon about their medical history and symptoms, and then a pharmacist approves the medication based on that self-reporting.

CNBC noted in May that Amazon often tests its services in foreign countries before giving the green light in the U.S.

More than 4 billion prescriptions are written every year in the U.S., while insurance companies, patients and others spent an estimated $300 billion on prescriptions in 2015.

"I think Amazon would introduce a lot of transparency to what drugs really cost," said Stephen Buck, a co-founder of GoodRx.

Buck says Amazon could possibly compete with Express Scripts and CVS Health, which might be a $25 to $50 billion market.

Buck added that the prescription drug market is more regulated than what Amazon is used to: "Prescription transfer laws and e-prescribing make it a little more difficult than putting something in a cart and checking out."

Amazon was an investor in Drugstore.com in the 1990s, but that website was sold to Walgreens, which closed it down.

Sources: CNBC (2), The Japan Times / Photo credit: Navy Petty Officer 1st Class Tim D. Godbee/Wikimedia Commons, Hamza Butt/Flickr, Mike Mozart/Flickr

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