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AMAZON RXPASS ISN’T FOR EVERYONE




Article by Lisa Phillips  |  Jan 24, 2023

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Digital Health
Prescription & OTC Drugs
US

READ NEXT
 * US Physicians on Social Media
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   February, 2024
   
 * A Senate committee focuses on Medicare Advantage marketing practices
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The news: Amazon Pharmacy launched RxPass exclusively for Prime members,
offering a limited number of generic drugs for a flat fee of $5 per month with
no limit on the number of prescriptions.

How RxPass works: The RxPass has a few important limitations at the outset,
which will limit its impact—at first.

 * Only Amazon Prime members are eligible. If they use RxPass for 12 months,
   that’s $60 on top of the annual $139 Prime fee. Consumers can’t use Health
   Savings or Flexible Spending accounts to pay the monthly fee, either.
 * Medicare and Medicaid beneficiaries aren’t eligible.
 * RxPass is available in 42 states. Currently, residents of California,
   Louisiana, Maryland, Minnesota, New Hampshire, Pennsylvania, Texas, and
   Washington aren’t eligible.
 * The number of prescriptions per month is unlimited, but only if patients take
   any of the 60 generic medications offered at launch. Conditions treated
   include allergies, high blood pressure, dementia, mental health, and skin
   conditions.

The opportunities: Consumers are taking more daily medications than ever before,
according to a 2023 poll from CivicScience.

 * 70% of consumers take at least one prescription drug per day, up from 56%
   daily medication users in 2019.
 * About one quarter (24%) of US adults now take four or more medications daily,
   compared with 18% in 2019.
 * 24% of consumers who are prescribed medications skipped taking those drugs in
   the past year due to cost concerns, per the CivicScience survey.
 * 70.7% of US households (93.0 million) are Amazon Prime members in 2023 and
   that number will grow to 74.1% (100.1 million) in 2026, we estimate.
 * Amazon got into the direct-to-consumer (D2C) virtual care space in November
   2022 with Amazon Clinic, a text-based telehealth service.

The challenges: Amazon Pharmacy’s November 2020 launch caused a great deal of
apprehension across the healthcare industry. But major players have since
changed their game plans, new entrants have emerged, and Amazon Pharmacy didn’t
cause the disruption many feared.

 * Pharmacy retailers CVS Health, Kroger Health, Walgreens, and Walmart have
   significantly boosted their in-store and virtual care services to include
   primary care, urgent care, and mental health services, among others.
 * Online pharmacies like DiRx Health and Mark Cuban Cost Plus Drugs sell a wide
   range of generic medications for low, transparent prices.
 * Pharmacy discount card programs are proliferating. GoodRx was an early leader
   in this space. It was recently joined by SmartRx, a division of cash-back and
   coupon platform Smarty, that also gives rebates for doctor and dentist
   visits, vaccines, and pet meds.

Our take: Amazon’s advantage is its growing number of Prime subscribers. But
RxPass’ limitations exclude a lot of Americans, by geography or health
coverage—or both.

The majority of US prescription drug spending comes from Medicare and Medicaid
programs, which are not eligible for RxPass benefits.

 * Medicare prescription drug spending will hit $292.6 billion (47.7% of the US
   total) in 2023. It will reach $356.4 billion (48.8% share) in 2026, we
   estimate.
 * Medicaid prescription drug spending will hit $83.4 billion (13.5%) this year,
   reaching $94.4 billion (12.9%) in 2026.
 * By contrast, consumer spending on prescription drugs—including co-payments,
   cost-sharing, and out-of-pocket payments—will be $76.2 billion (12.3%) this
   year, rising to $96.6 billion (13.2%) in 2026.
 * Insurers and employers will pick up the rest, spending $168.1 billion (27.1%
   share) this year and $183.1 billion (25.1%) in 2026.

And Amazon Prime members aren’t motivated by cheap drug prices, according to a
June 2022 report from PYMNTS.com. Most (64%) want free shipping, while only 12%
value Prime Video access most. Prescription drugs didn’t make the list.

Go deeper into the digital pharmacy market with our Digital Pharmacies 2022
report.



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This article originally appeared in Insider Intelligence's Digital Health
Briefing—a daily recap of top stories reshaping the healthcare industry.
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 * Want to learn more about how you can benefit from our expert analysis? Click
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