Amazon announced Thursday that it would acquire PillPack, an online pharmacy with a nationwide reach, in a deal that could quickly make the online giant a major player in the drug business.
The deal is precisely the kind of news that the health care industry has been fearing for months, as Amazon hinted that it was interested in expanding its reach to include prescription drugs, a $560 billion business.
One barrier to entry for Amazon had been the bureaucratic hassle of securing pharmacy licenses in each state. But in acquiring PillPack, it is essentially leaping over that hurdle because the company is licensed to ship prescriptions in 50 states.
Anxiety over what Amazon might do in health care has unsettled the industry and has been seen as one factor in a wave of recently proposed mergers, including CVS’s acquisition of Aetna and a union between the health insurer Cigna and Express Scripts, the pharmacy benefit manager. Last fall, perhaps in a move to get ahead of Amazon, CVS announced it would offer next-day delivery of prescription drugs and same-day service in some big cities.
The entry of Amazon into the pharmacy business could make it easier for the big pharmacy benefit mangers to persuade the Justice Department that their contemplated mergers with insurance companies will not harm consumers by hindering competition.
PillPack, which started in 2013, is an online pharmacy that distributes its pills in easy-to-use packages designed for consumers with chronic conditions and multiple prescriptions. The company sorts prescriptions by the dose and includes a label with a picture of each pill and notes on how it should be taken. It has long been seen as a potential target for larger businesses looking to expand their reach in online drug sales, including Amazon and Walmart.
While innovative, it is not necessarily a major player in the pharmacy world, bringing in about $100 million in revenue in 2017, according to the company.