Amazon Pharmaceutical


Every day, Covenant students drop by the mailroom to pick up packages containing all sorts of items—electronics, apparel, textbooks, school supplies, dorm-room decorations many coming from the beloved company, Amazon. However, in the near future, Covenant students could be picking up one more kind of item from the Carter basement: medicine.

Although Amazon has not officially announced plans to move into the healthcare market, observers point to multiple signs that denote the company’s intention. Christina Farr from C.N.B.C. reports that “For the last few years, Amazon has held at least one annual meeting at its Seattle headquarters to discuss whether it should enter the pharmacy business” and points to the new hiring of the general manager as a decisive move towards this transition. Amazon has even begun to sell prescription drugs on its Japanese site to consumers with pharmacist approval. This is typical of Amazon to test new product lines in foreign countries before implementing them in the U.S., such as its experimented drone delivery system in Canada.

This is not Amazon’s first exposure to health care. The company previously backed in the late 90s and was expected to carve a large chunk of revenue from the market until sold to Walgreens (Farr). Despite this past failure, Amazon currently supplies non-prescription health supplies such as gauze and thermometers to consumers and even, as Wendy Kauffman from N.P.R. reports, has a hand in healthcare through their cloud computing service, Amazon Web Services.

While Google and Microsoft also provide similar services, Amazon is the leader in renting computing power for pharmaceutical companies. This service makes information and resources available that were previously impossible or too costly which helps improve the quality of healthcare for patients. Amazon also operates a health team called 1492 which focuses on hardware and software projects such as the health applications of Echo and Dash Wand—the company's’ new voice-interactive devices available on retail (Farr).

Regarding strategy, in a thirty-page report from five research analysts, Goldman Sachs predicts Amazon will begin entering the market by partnering with a pharmacy benefits manager (P.B.M.) which acts as an intermediary between health care consumers and producers (Farr).

Even before an official decision by the company, which should be made before this Thanksgiving (Farr), Michael Sheetz from C.N.B.C. says the impact of this possibility is already in action. Stocks in prescription giants such as Walgreens, RiteAid, and CVS Health have all slipped four percent or more as of October 6, evidencing a disruption in these distributor’s hold on the market.

The impact is not confined to Amazon’s potential competitors. It will also affect consumers of high-priced healthcare. In her recent book “American Sickness,” Elizabeth Rosenthal addresses the deeply rooted problems of the existing healthcare system. In a market economy driven by the profit incentive, some manufacturers approach medicine in a questionable way. For example, it is more profitable to provide lifetime treatment than a cure.

“'One expert in the book joked to me…that if we relied on the current medical market to deal with polio, we would never have a polio vaccine,’ Rosenthal says. ‘Instead we would have iron lungs in seven colors with iPhone apps’” (Kauffman). Amazon stands as a beacon of light in contrast to these practices, hoping to provide more price transparency in healthcare which is characterized by its expensive goods.

This potential change is ideal for Covenant students. Not only would lower prices put less strain on student’s tight budgets, but convenient shipping options would provide an appealing alternative to the regular trek down the mountain to refill prescriptions—especially for students without cars.

While some focus on the consumer benefit of this change, others question the further outcomes of the transition. Ryan Clark at Copyright Clearance Center, an organization facilitating information-sharing across pharmaceutical companies for the purpose of Research and Development (R&D), suspects this shift in the market could produce some unintended consequences. Profit from drugs typically helps cover companies’ R&D costs on the back end. Clark questions whether Amazon’s entry into the market would disincentivize R&D because lower prices would make some companies unable to cover their costs. “Or,” Clark asks, “will Amazon push the entire pharmaceutical supply chain to double down on innovation and R&D, finding newer and better ways to drive discovery?”

Others question how Amazon will regulate their distribution and navigate this dangerous field wisely. Sophomore Ian Banks (‘20) expressed his concern, stating, “I’m not comfortable with the sale of pharmaceuticals online because of the potential for abuse. But, it could be done well if done with great care and an eye towards that reality.” Many questions loom in the air regarding Amazon’s intentions and execution in the next months and years, but answers will only come as time unfolds.