Prior to being purchased by Amazon, PillPack had carved out a niche for itself by pioneering the online pharmacy space with customized packaging and automated refill services. In 2019, Amazon began targeted offerings of the PillPack service with free delivery to select Prime members, focusing on a suite of medications for chronic conditions.
Haven, Amazon’s recently announced joint venture with JPMorgan and Berkshire-Hathaway, has so far only said it plans to “improve healthcare for the employees” of the three organizations. There is concern in the industry, however, that Haven intends to establish itself as a pharmacy benefits manager (PBM), negotiating directly with insurance companies to lower the cost of the drugs they purchase while providing a competitive advantage to PillPack.
CVS filed a lawsuit partly aimed at uncovering Amazon’s intentions, and while Amazon denied the PBM allegation, they also did not rule out the possibility of pursuing a future PBM model. Since CVS alone generates 60% of its total annual revenue - $116 billion annually – from their PBM operations, Amazon’s entry into the PBM market could “change the dynamics of the healthcare industry in profound ways,” according to the White Paper.
While CVS’s claim is speculation, should Amazon succeed at establishing themselves as a PBM and negotiating lower prices, it could potentially open the door to the wider adoption of smart technology in healthcare packaging, eliminating concerns from insurance providers and Medicare over cost escalation. Reduced pricing for PillPack could also allow Amazon to focus more on expanding the level and depth of individual patient customization for packaging, making packaging inherently more convenient and increasing senior’s medication compliance.
What does this potential disruption mean for the healthcare market? The move toward digital platforms and online portals presents a significant opportunity as online pharmacies inevitably occupy a larger space. With recent industry trends and the emergence of a number of startup models copying PillPack, the healthcare industry is already showing it will not be immune to this online expansion. Companies packaging healthcare products can be in front of the trends by creating e-commerce capable packaging that can also be utilized in all other channels.
Make plans to visit PACK EXPO East in Philadelphia, March 3-5, to see on-trend healthcare packaging machinery and materials.