Morning Briefing
Summaries of health policy coverage from major news organizations
Amazon's $1B Purchase Of PillPack Offers Another Hint At Company's Ambitious Health Care Plans
The New York Times: Amazon To Buy Online Pharmacy PillPack, Jumping Into The Drug Business
In the world of health care, PillPack, an online pharmacy, is a pretty small player. Its work force of 1,000 or so people pales in comparison with the 235,000 who work for Walgreens. But when Amazon announced on Thursday that it was buying PillPack, the deal immediately shook the industry. Shares of Walgreens and Rite Aid tumbled more than 9 percent, while CVS Health dropped 6.6 percent. That’s because with one move, Amazon answered the question about when — and how — it would grab a piece of the $560 billion prescription drug industry. (Ballentine and Thomas, 6/28)
Bloomberg: Amazon Makes $1 Billion Splash In Health Care, Buying PillPack
PillPack has mail-order pharmacy licenses in all 50 U.S. states, which could allow Amazon to expand quickly. PillPack also has relationships with most major drug-benefit managers, including Express Scripts and CVS, and says it works with most Medicare Part D drug plans. Those ties will give Amazon access to much of the prescription drug market in the U.S. PillPack sells pre-sorted packets of prescriptions drugs, delivering them to customers in their homes. The closely held firm has software that automates many tasks, such as verifying when a refill is due, determining co-pays, and confirming insurance. That eliminates much of the manual work that pharmacists often are saddled with now. (Langreth and Tracer, 6/28)
Reuters: Amazon To Buy PillPack In Potentially Disruptive Drug Retail Push
The deal's potential to disrupt major players across the drug supply chain nationwide prompted a sell-off in shares of possible rivals, while sending Amazon shares up 2.5 percent. PillPack supplies pre-sorted prescription drugs and other services to people who take multiple medications, a growing market as the U.S. population ages and requires treatment for multiple complex, chronic conditions. Amazon is vying for a share of what is a more than $450 billion total U.S. prescription drug market, according to research firm IQVIA. (Rai and Banerjee, 6/28)
Stat: Amazon’s Acquisition Of PillPack Not A Fatal Blow To The Pharmacy Industry
The announcement of this deal is the first step on a long and crooked path, and there is no guarantee that Amazon (AMZN), for all its size and success, will quickly become a major player in the nation’s $370 billion drug business. The acquisition of PillPack confirms Amazon’s intention to sell prescription drugs to consumers nationwide. With a primary pharmacy located in Manchester, N.H., PillPack has operations across the country and ships prescription drugs in pre-sorted packets to 49 states (the only exception being Hawaii). (Ross, 6/28)
The Wall Street Journal: Amazon Buys Online Pharmacy PillPack For $1 Billion
But the health-care market may be challenging for Amazon to disrupt. It is highly regulated, and depends on a complex web of contracts, interconnected data systems and other relationships with health plans, drug-benefit managers and other health-care players that Amazon may not want to alienate if it wants its pharmacy business to prosper. Walgreens executives were holding a conference call with financial analysts when Amazon announced the deal. Walgreens CEO Stefano Pessina said the company is “not particularly worried” about the move. (Terlep and Stevens, 6/28)
Stat: Amazon Is Taking On Health Care’s Most Vexing Challenge: The Chronically Ill
The company’s acquisition of the home delivery pharmacy PillPack is entirely separate from its venture with JPMorgan Chase and Berkshire Hathaway to improve and lower the cost of care for the companies’ 1 million employees. But taken together, the two initiatives realize the worst fears of many of the health care industry’s entrenched incumbents — that Amazon is making an aggressive play in portions of the market that many consumers, investors, and health industry specialists see as ripe for disruption. (Ross, 6/29)
Chicago Tribune: Walgreens' Value Falls By $6 Billion As Amazon Shoulders Its Way Into The Pharmacy Sector
Walgreens’ shares plummeted Thursday following news that Amazon is shouldering its way into the pharmacy business, a development that capped off an eventful few weeks for the Deerfield-based chain. Earlier this month, it announced plans to relocate 1,800 employees to Chicago’s former main post office, including 1,300 who will move from its Deerfield campus. On Tuesday, it became part of the Dow Jones industrial average. (Schencker, 6/28)
The Wall Street Journal: Behind PillPack’s $1 Billion Sale, A Frustrated 32-Year-Old Pharmacist
TJ Parker grew up working the counter for his father’s pharmacy in Concord, N.H., where he became frustrated by how much customers struggled to keep track of their medications. He went to pharmacy school but rather than take up the family business, he and a friend set out to change it. In 2013, they launched an online pharmacy from Manchester, N.H. On Thursday, the 32-year-old CEO said he sold his startup to Amazon.com Inc. It was a roughly $1 billion deal, according to people familiar with the deal. Mr. Parker is expected to stay involved after the deal, said a person familiar with the matter. (Brown and Terlep, 6/28)
Concord (N.H.) Monitor: Amazon’s Shakeup Of The Pharmacy Industry Has Roots In New Hampshire
Parker holds a Doctor of Pharmacy degree from Massachusetts College of Pharmacy and Health Sciences. While there, he met the company’s eventual co-founder, Elliot Cohen, through MIT’s Hacking Medicine program, which seeks to help entrepreneurs in the medical services field. They founded PillPack in 2013 in Manchester. (Brooks, 6/28)
Marketplace: Amazon Acquires PillPack As It Muscles Its Way Into The Health Care Industry
Today the online retail giant snatched up PillPack, an online pharmacy that presorts prescription drugs and delivers them to your door. Walgreens, Rite Aid and CVS all saw their stock prices take a dive in early trading on news of the deal. (Gorenstein, 6/28)
