Retail Rx gets out ahead of Amazon

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Challenges facing e-tail giant in pharmacy market are formidable

Speculation about the possible entry of Amazon into the prescription drug business has been abundant in recent weeks.

Financial analysts and journalists have generated a steady stream of reports about what is planned by the e-commerce powerhouse which, beginning with books 23 years ago, has succeeded in disrupting established business patterns in one merchandise category after another. The company has refused to comment on its intentions.

All the talk of Amazon entering the pharmacy market the has roiled the waters in community pharmacy and related sectors.

Depending on the conjecture of the moment, stock prices of publicly traded pharmacy operators have fluctuated, and stories about how those companies would perform in the face of direct competition from Amazon have ­proliferated.

While at this point no one outside Amazon knows what the company’s plans are, it’s a safe bet that the nation’s $450 billion prescription drug business is on the radar screen there, and that, if founder and chief executive officer Jeff Bezos does decide to move into the field, a very serious effort to win a significant market share will ensue.

Amazon has shown a willingness to spend money and invest for the long term in cracking new categories with vast potential, and its business model, emphasizing low prices and customer convenience, would no doubt have some appeal to many prescription drug users, especially those on maintenance ­medications.

The challenges to entry, however, are formidable. The company would have to learn how to navigate through a labyrinth of government regulations and complex business relationships involving, among others, drug manufacturers, pharmacy benefits managers and retailers.

It will be fascinating to see whether Bezos thinks Amazon has what it takes to disrupt an established industry that performs an integral part in helping Americans maintain their health.

Community pharmacy operators can’t afford to stand pat while waiting to see what Amazon will do. To begin with, the industry should make certain that policy makers, payers and consumers all understand that there’s much more to pharmacy care than selling prescription medications via the internet.

One-on-one interaction between a pharmacist and a patient raises the likelihood that treatment will achieve the desired result, and it is particularly important with polychronic patients and senior citizens who take more than one medication. The personalized care that people routinely receive in a retail pharmacy can’t be easily replicated online.

Individual pharmacy operators should use the calm before the storm that the arrival of Amazon would unleash to fortify their unique strengths, expand the scope of service and find new ways to help patients.

CVS Health is doing just that, taking a number of steps in recent weeks to bolster its already formidable array of capabilities and enhance its impact on the health and well-being of customers. To cite just one example, the CVS drug chain introduced ScriptPath Prescription Schedule to help patients taking multiple medications manage their drug regimen.

Available at all of CVS Pharmacy’s 9,700 locations, ScriptPath gathers all of the prescription information the drug chain has for an individual in one place. By making it clear to patients and caregivers what medications a person should take, when the patient should take them and proper dosing information, ScriptPath is designed to improve adherence and health outcomes.

Individual schedules are generated by a science-based system developed by CVS that analyzes medication information, prescribers’ instructions and clinical data. The system will be augmented early next year with the rollout of new prescription vial labels that feature easy-to-read icons corresponding to the ScriptPath schedule. The system is sure to help the 50% of patients that CVS executives say have difficulty following a drug regimen, including the more than 9 million CVS Pharmacy patients who take more than five medications every day.

In developing ScriptPath, the company has drawn on years of experience that have more to do with patient care than the procurement and distribution of health care products. As long as CVS and other pharmacy operators emphasize that distinction and act on it, they should be able to turn back any challenge that Amazon might mount.


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