Mouse And Drugs

Will the Amazon Effect Reach the Pharmaceutical Sector?

The “Amazon effect” has impacted many industries over the years. From digitizing the world of books back in the nineties to turning the big box retail model on its head in recent years, any vertical the e-commerce giant touches typically gets disrupted. ¬†

Now, the pharmaceutical sector seems to be next in line…

After several years considering the business of prescription drugs, founder Jeff Bezos is firming up that interest with new hires to lead the pharma push. The potential for a shake-up is immense, given the sheer size and buying power of Amazon.

The news could not be more timely for patients, as prescription drug prices continue to rise high above inflation. No-one can say for certain exactly how the Amazon effect will unfold in a given industry, but it almost always leads to price competition and a better deal for consumers.

This is attractive for everyday consumer goods like books and household items, but it is likely to mean far more for patients struggling every month to pay the overinflated price tag of the drugs that keep them alive.

Amazon’s influence could also bring more transparency to drug prices. Just this week, a news report in Connecticut highlighted the hidden prices of common medications. Contracts known as Pharmacy Benefit Managers (PBMs) are used by drugmakers to protect insurance co-pay prices for drugs, by preventing less expensive cash purchase options being recommended by pharmacy operators.

According to analysts, this is a common trick used around the country to keep patients on the most profitable drugs for the pharma companies that select them.

According to analysts, this is a common trick used around the country to keep patients on the most profitable One pharmacist, speaking on condition of anonymity, explained that contractual penalties with drug companies force him to keep cheaper alternatives hidden from patients. In case. He concludes:

“We are being forced to overcharge people for the product, so they’re paying more than they should for this medication.”

If Amazon enters the market, patients and pharmacists alike will hope that it blows the industry wide open. Online shopping typically presents much more information to consumers, which is exactly what drugmakers will be worried about as a powerful new competitor waits in the wings of their lucrative business sector.

Online shopping typically presents much more information to consumers, which is exactly what drugmakers will be worried about as a powerful new competitor waits in the wings of their lucrative business sector.