same-day delivery for Foundayo<\/a>, Lilly\u2019s new weight-loss pill. Can you tell me about how that\u2019s going so far and also how GLP-1s have impacted the trajectory of Amazon Pharmacy?<\/p>\nJohn Love: I think GLP-1s are an interesting change in collection in healthcare in that you\u2019ve got this very wide-scale category that you could call \u201clifestyle,\u201d where now people are doing more cash or direct pay. There\u2019s always been health optimizing, health influencing, people taking supplements or lightening strips or protein. But GLP-1s are proving to be effective. And something as important as weight loss affects many millions of Americans. So, we\u2019re seeing a great deal of consumer interest in it.\u00a0<\/p>\n
Payers don\u2019t quite know how to cover these medications yet, so you get a higher cash mix. Our goal is to assort every medication that people need, in all classes and types. But certainly these have been very popular treatments. So you\u2019re getting a new set of individuals who may not be on another chronic medication now engaging with prescription pharmacies because they\u2019re trying to work out, they\u2019re trying to lose weight, and these medications have been really popular for that.<\/p>\n
![\"US-TECHNOLOGY-INNOVATION-AMAZON\"](\"data:image\/gif;base64,R0lGODlhAQABAIAAAAAAAP\/\/\/yH5BAEAAAAALAAAAAABAAEAAAIBRAA7\")
<\/p>\n
Love speaking at Amazon\u2019s Delivering the Future event at the company\u2019s BFI1 Fulfillment Center, Robotics Research and Development Hub, in Sumner, Washington, on October 18, 2023 (Jason Redmond\/AFP)<\/p>\n
Sherwood: Would you say that it\u2019s expanded the Amazon Pharmacy user base rather than just being something that people who were already on it are pivoting to?<\/p>\n
Love: A bit. If you think about our user base, we\u2019ve engaged more customers and grown over the years in two main ways: one is we\u2019re on Amazon, so you can imagine customers shopping on Amazon saying, \u201cOh my gosh, I get all these products delivered and I can get my prescription medication showing up on my doorstep.\u201d That\u2019s one method in which we\u2019ve seen growth. The other is working with the industry. So, we don\u2019t treat pricing and availability as IP. We freely give APIs to providers \u2014 Noom, Weight Watchers, third parties \u2014 and they can have Amazon Pharmacy\u2019s availability, speed, and pricing all available at the point of prescription. We do that with payers, with manufacturers. Part of it is, yes, we fulfill and dispense for folks like Lilly Direct. We\u2019ve done it for Blue Shield of California, Emblem. The other way is just being a great dispensing pharmacy for customers, integrated in different parts of the pharmaceutical industry.<\/p>\n
\u201cOur goal is to be completely indifferent of how people pay\u201d<\/p>\n
Sherwood: Help me understand how that math changes when you\u2019re talking about a cash-pay product. The whole concept is cutting out middlemen. How does it work on your end when you\u2019re dealing directly with a drugmaker versus a wholesaler?<\/p>\n
Love: Well, if you shop on our pharmacy in the US, you have the usual and customary price. And then we can go work to build programs that save customers money. We\u2019ve got three: PrimeRx, RxPass, and coupons.\u00a0<\/p>\n
We can work directly with a pharma manufacturer. If they\u2019re not paying a whole bunch of folks somewhere in the middle, they\u2019re deciding what their right cost is for the R&D, the manufacturing, and the dispense of these.<\/p>\n
More recently, you\u2019ve seen Wegovy and Foundayo come out with much lower prices for their shelf-stable pills. We can work directly on that. You don\u2019t have as many players. There are no claims, there\u2019s no insurance filing. That\u2019s if someone\u2019s not using an insurance instrument, I should be clear \u2014 these medications are also eligible for some insurance.<\/p>\n
And our goal is to be completely indifferent of how people pay for it. But the best healthcare scenario for all of us is lower the total cost to the healthcare system and lower total out of pocket. What you see in these meds is a lot of people, they may not have commercial coverage for it, so they\u2019re paying \u2014 call it $149 \u2014 out\u00a0of pocket for the medication, and we\u2019re able to buy directly from the manufacturer or a partner wholesaler.<\/p>\n
Sherwood: Let\u2019s say the Wegovy that\u2019s inside an Amazon Pharmacy at one of these warehouses \u2014 are you sourcing it from the same place no matter if somebody is paying with insurance versus cash pay?<\/p>\n
Love: Yeah, we abstract that. We negotiate directly with all sorts of direct manufacturers. So whether that be a generic or the Big Pharma companies, we\u2019re working with them directly. And we can utilize wholesalers. Now, the reason that can be interesting is that we\u2019ve been building many, many pharmacies. One of the things we\u2019re focused on is speed and getting customers access. So, it may not be efficient to go buy directly from a whole bunch of different places into a whole bunch of different pharmacies. In some instances, we will use a wholesaler; in some instances, it will be direct. But we can do that indifferent to what the payment is. We let the customer choose how they want to pay for the meds, and that should be irrelevant to how we\u2019ve sourced.<\/p>\n
Sherwood: Historically, one of the biggest problems for pharmacies is not getting reimbursed by insurance at any margin. How does Amazon not run into those same issues that, not just companies like Walgreens, for example, but mom-and-pop pharmacies for decades have been dealing with?<\/p>\n
Love: Well, I think that\u2019s a big question. That affects all healthcare. Health is not evenly distributed. You\u2019ve got some Americans consuming more healthcare than others. And commercial payers are paying into a fund to insure their team members and employees, the federal government, we\u2019re paying into Medicare and Medicaid. And generally what happens to all pharmacies \u2014 Amazon Pharmacy, independent, or brick-and-mortar, like a Walgreens, CVS, Walmart, large chain \u2014 is the reimbursements are basket economics. Often pharmacies are paid a little bit more for generics with the concept that patients being on generics is a good value. It takes total cost out of the health system. If a patient is adherent, they\u2019re going to stave off further stages of sickness. They\u2019re going to have their best health outcomes. But branded medications are often negatively reimbursed, meaning the pharmacy, any pharmacy, might pay more to acquire that good than they would get reimbursed on the back end, so you\u2019d be at a loss.\u00a0<\/p>\n
If you look at the large, publicly traded pharmacies that break out their financials, there is a small positive margin in most pharmacies. They\u2019re succeeding, but it\u2019s a tough business. You have to run it really well. You have to be very laser-focused on quality, safety, and cost, and doing that job well earns a small positive margin. But the margin is not the same med to med, which is something we would love to see changed. We\u2019ve actually partnered with some folks on a cost-plus agreement, where we\u2019re completely indifferent to the medication and we get effectively a dispensing fee. So then you\u2019d have a finite, small, positive margin, and you wouldn\u2019t run into this wacky situation where some meds are making more money, some are making less.<\/p>\n
Sherwood: Is Amazon Pharmacy as a stand-alone segment profitable?<\/p>\n
Love: We don\u2019t disclose the Amazon Pharmacy or health services. They are not broken out in our earnings, so we can\u2019t talk about them.<\/p>\n
Sherwood: My understanding is Amazon Pharmacy was built on top of PillPack, which was an acquisition in 2018. As you\u2019ve scaled, what PillPack DNA is still in the company?<\/p>\n
Love: Well, quite a lot. PillPack\u2019s ethos should be, \u201cMake what should be simple, simple.\u201d And TJ and Ellie and I spent a bunch of time on that and we all agreed \u2014 why is healthcare so complicated? Why does the US lose $300 million in nonadherence and costs? That\u2019s emergency room visits, more extreme sickness. That is still every bit of our DNA. We still do the packet business. We still do a lot of refills. We still work with all major insurance companies. So, all of those things remain true.\u00a0<\/p>\n
We acquired PillPack in 2018. And from that, the pharmacy knowledge there helped us launch Amazon Pharmacy at the very end of 2020. When we started, we had a few larger central fill dispensaries. And we were really great for chronic medications. PillPack\u2019s most fervent fan base is people who are taking five to six medications. They\u2019re getting them in those little date- and time-stamped packets, which helps them organize their medication, stay adherent. <\/p>\n
We started with patients primarily engaging in chronic meds, just due to the speed. And then the invention we had a couple years ago was, what if we built smaller-format pharmacies, staffed by clinical pharmacists, the whole pharmacy has the humidifier system, the autofill, everything, but it\u2019s in a sub-same-day network on Amazon. What that enables us to do is run five sub-same-day waves of delivery in that neighboring area and get 24-hour delivery. That was a novel invention. We built 25 different pharmacies all across the US last year. And now we\u2019re on path this year to enable 24-hour-or-less delivery to 4,500 cities and towns. <\/p>\n
That\u2019s building off of what we learned in PillPack and the tools and the technology and the contracting and all of that. Making it simple, but now that\u2019s integrating with Amazon speed and logistics. We\u2019ve done this in many other categories. Our grocery team, you can see doing something similar. And then we acquired a kiosk company, and with a kiosk, you\u2019re looking at like 180 seconds. So the five kiosks that are live today in Los Angeles, or coming soon \u2014 that experience is, you go to the doctor, they prescribe, they can tell you if it\u2019s in the lobby. You can scan a QR code, check out, and walk out with your med.<\/p>\n
<\/p>\n
A rendition of an Amazon Pharmacy kiosk at an Amazon One Medical location (Amazon) <\/p>\n
Sherwood: Tell me a little bit about what goes into scaling. You guys basically carve out a pharmacy inside of a fulfillment center and then work off of that. How many of those do you have left to do this year? And what are the resources that it takes to do that?<\/p>\n
Love: Yeah, it\u2019s a good question. The invention was the three walls of a pharmacy. We called them small-format or sub-same-day. If you ever shop on Amazon and you see, \u201cOrder it now, get it by 12 p.m.,\u201d that\u2019s the experience we plug into.\u00a0<\/p>\n
So we build an entirely secure pharmacy that is staffed by pharmacists and pharmacy techs. We can put an autofill machine in there for speed and quality. We\u2019ve got option value. We do cold chain there, so things like Zepbound and Wegovy, including the injectables, insulin products \u2014 we can do those as well. We stand these pharmacies up. We\u2019re talking 1,500 square feet, where a larger-format pharmacy for us might be 50,000 square feet. You have smaller teams, and you can work scripts around the clock and get those out into waves.<\/p>\n
We built 25 of those pharmacies last year. This year is going to be very similar in our build schedule; the exact number and placements will be determined by licensing and permits and a bunch of other things with our build teams. But that\u2019s what\u2019ll get us to 4,500 cities and towns by the end of the year. You\u2019re looking at about two-thirds of Americans with meds, 24 hours or better.<\/p>\n
\u201cThere\u2019s not going to be any one company that solves self-care. I actually don\u2019t think we want that.\u201d<\/p>\n
Sherwood: Do you see companies like Hims & Hers, Ro, Weight Watchers, and Noom, which you mentioned earlier, as competitors or partners, especially when it comes to dispensing GLP-1s?<\/p>\n
Love: Well, the most accurate answer is probably both. I\u2019m a big fan of invention in healthcare. If you look at the size of the US healthcare business all up, it\u2019s the fourth- or fifth-largest GDP in the world. So, there\u2019s not going to be any one company that solves self-care. I actually don\u2019t think we want that. So a hybrid of options is really great for consumers. That often gets misunderstood in the media \u2014 it\u2019s this or that or which one\u2019s going to win. But I believe healthcare is likely to be much more digital and national. The ability to have it in your pocket and engage, whether that be Amazon or another experience, that\u2019s going to be very popular and has a lot of room to grow. I also think that indie pharmacy and the local in-person provider where you\u2019ve got a care team that might be blocked down the street is really important and powerful as well. I see both of those thriving.<\/p>\n
You\u2019ve also seen people focus on conditions: Maven with women\u2019s health and Weight Watchers and Noom, and Hims & Hers looking at lifestyle conditions. You\u2019ve seen a lot of different players focus on a component of the problem and say, we want to come and really work on doing this well. But it\u2019s the combination of virtual care for the right conditions.\u00a0<\/p>\n
Sherwood: You talk about the digitization of healthcare. One of the criticisms of that is, especially when you\u2019re talking about platforms where the doctor prescribing you something and the pharmacy dispensing the medication are operated by the same company, the incentives can be misaligned. How do you avoid that or even the perception of that?<\/p>\n
Love:\u00a0I\u2019m most excited about a federated healthcare system where I can link one and third-party companies together. That means they are not all owned by the same company.\u00a0<\/p>\n
The largest entities tend to be very vertically integrated. I don\u2019t think it\u2019s so much even just the provider in the pharmacy, which could be convenient, but it\u2019s the health plan, the PBM [pharmacy benefit manager], the service layer, the manufacturer, the pharmacy. They\u2019re conceptually negotiating with themselves at like six different layers. And that can cause a real conflict and interest.\u00a0<\/p>\n
And that\u2019s where we\u2019ve seen, why haven\u2019t we made more progress? Why isn\u2019t price transparency free and broad for everyone? That\u2019s a crazy thing to work on. I don\u2019t go to restaurants where I don\u2019t see the prices, or buy video games or socks or books \u2014 all of that is open and available. <\/p>\n
That\u2019s where there\u2019s tension, is when you get vertically integrated companies that have a direct conflict of interest. That\u2019s one of the reasons we have these APIs. We offer pharmacy services for Lilly Direct, for Noom, for Weight Watchers. We\u2019ll integrate with a health plan so that their members can see their pharmacy services. But they can always see others. <\/p>\n
We had an example where Amazon One Medical has virtual care. And at the end of a treatment, if a prescription is appropriate, the doctor decides that. You can choose Amazon Pharmacy or any pharmacy of your choice. And the interesting thing you see in that experience is, for lifestyle meds and chronic medications, patients love to choose Amazon Pharmacy and get it delivered. Particularly lifestyle is interesting because there might be a privacy aspect to it, too. You see the highest rate of choice for a digital delivery experience there. But for acute treatments, the majority of people still pick, I want to go pick this up, because the speed is so important and they just, they\u2019re ready to jump in a car and go grab it. <\/p>\n
With the exact same experience, when it\u2019s fully transparent, you see customers can navigate what\u2019s best for them. That\u2019s what I\u2019m excited about in working with third parties. That\u2019s the reason we haven\u2019t pursued a PBM. We don\u2019t have any conflict of interest. Our business is just dispensing meds safely and reliably for patients. And we like that business model.<\/p>\n
\u201cVery few people would say their US healthcare system is convenient. That would probably not be the word that would pop on a word bubble\u201d<\/p>\n
Sherwood: Was that data point something that was behind the kiosk idea or the same-day delivery? The idea that people often want a brick-and-mortar option when it comes to something like, let\u2019s say antibiotics or painkillers.<\/p>\n
Love: Well, the ultimate one is convenience. Very few people would say their US healthcare system is convenient. That would probably not be the word that would pop on a word bubble. We believe there\u2019s a lot of room, and we\u2019ve got a bunch of assets and capabilities that align with convenience \u2014 if we can do delivery very quickly and reliably, at low cost, and if we can enable pickup at the point of convenience. The most convenient experiences when we\u2019re brainstorming are, well, you could have a drone deliver this thing in 30 minutes or 60 minutes. You could literally walk out with meds. Amazon has just walk-out experiences. That was the inspiration by it. It wasn\u2019t any particular form factor. It was just, what would be the simplest and most convenient way for you as a customer, not feeling well, to be able to access medication? That drives the innovation. So we\u2019re always looking at, three to five years from now, what would be the next wave of innovation and convenience to access your medication?\u00a0<\/p>\n
Sherwood: It definitely seems like Amazon\u2019s focus is the logistics of the day-to-day pharmacy needs, but you\u2019re also seeing a consumer tech and longevity boom at the moment. People are buying wearables and are curious about peptides. Do you see an opportunity there? I\u2019m just curious what your thoughts are on that development.<\/p>\n
Love: Yeah, I do. I gave you half of the story. Today, a lot of the healthcare system runs through a few large vertically integrated scenarios. Most of us, in a perfect world, if you are health-aware and reasonably proactive about health, what you\u2019d probably love to do is stitch together your care providers. We might use Apple Health if we\u2019re wearing a watch or an Oura Ring or something like that. And we\u2019d want to connect that with the labs that we got done either in our primary care or a LabCorp. We might see a specialist for a condition that we have. I had a knee act up from time to time, so I\u2019d go to an ortho. In a perfect world, those entities that I connected would not all be the same company. They\u2019d be independent companies that are great at what they do. I can pick the best of the best and the ones that I want that fit with my lifestyle, and be able to have a connected health experience. We\u2019re getting really close to that and it\u2019s super exciting.\u00a0<\/p>\n
We have the building blocks, but they don\u2019t connect easily. So how pharmacy plays in there is if we can tell you all of the medications that you have and the pricing and the speed and everything like that, we could be a good partner if you went in and got labs and, great news, you\u2019ve been exercising more and your cholesterol\u2019s down. We could help recommend maybe it\u2019s time to titrate your meds down a little bit, that type of thing. We always talk about personalized experiences. We are now getting to the point where people will be able to have personalized healthcare, linking together a few independent sources of care. And the pharmacy would be one link in that chain.<\/p>\n
Sherwood: Drug pricing and a lot of the other things we\u2019ve talked about today have also been a big priority of the Trump administration. TrumpRx, which my understanding is a partnership with GoodRx, was launched earlier this year. Has that at all fundamentally changed the way that Amazon Pharmacy operates, or do you see an opportunity there?<\/p>\n
Love: Well, Amazon Pharmacy will work with all administrations and political parties. The element that we are excited about is that the administration, what they\u2019re trying to do with TrumpRx, I think that the North Star is to get more transparent and more affordable pricing on branded medications. And what they\u2019ve done is the administration negotiated directly with 17 Big Pharma companies and asked for lower pricing there. It\u2019s a hard problem because cash pricing on, say, a diabetes medication or mental health medication, most often those are paid for with insurance anyway. The cash price could go from $1,500 to $150, but if everyone\u2019s using an insurance instrument, not many people are paying $150. Outside of lifestyle medications, the trick is to make things affordable both with cash and on insurance, because a lot of us pay in or have some insurance instrument, and we certainly want to use that wherever possible for our care so it\u2019s not coming out of pocket. But I\u2019m very excited about the general energy around transparency and finding ways to lower prices.\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"Amazon will already mail you pretty much anything you can buy on the internet, stream your music and…\n","protected":false},"author":2,"featured_media":546974,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[43],"tags":[102,2960,56,54,55],"class_list":{"0":"post-546973","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-healthcare","8":"tag-health","9":"tag-healthcare","10":"tag-uk","11":"tag-united-kingdom","12":"tag-unitedkingdom"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/546973","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=546973"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/546973\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/546974"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=546973"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=546973"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=546973"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}