In the earlier stages of the development of the web as a vehicle for transacting business, the term disintermediation was often referred to. It's the process whereby the web provides a consumer direct access to a product, service, or information that would otherwise require a mediator. The classic example was the disintermediation of travel agents because consumers could book their own airplane reservations on the web. Amazon's PillPack is trying to end run the major retail drug store companies like CVS and Walgreens but the company is experiencing some pushback. All of this was discussed in a recent article (see: How Pharmacies Are Resisting Amazon’s Attempt to Corner Their Business). Below is an excerpt from it:
Since being acquired by the internet giant, PillPack has run into stiff opposition, from chains like CVS with thousands of stores to family-owned operations with a single shop. Having seen their business of selling shampoo and razor blades chipped away by online sellers, the drugstores are trying to keep Amazon from wresting away their piece of the $333 billion U.S. prescription-drug industry....But to make the process seamless for customers, PillPack needs to ask a patient’s pharmacy or doctor to transfer their prescriptions. While it’s always faced some pushback, PillPack contends that after Amazon said it was buying the startup in June 2018, its faxed requests for prescription transfers started being slow-walked or even completely disregarded.....And when PillPack technicians call to follow up, some pharmacists are “literally hanging up the phone without saying anything, which happens probably daily.” ....But once it hit the radar screen of the big chains, transfers became harder as drugstores increasingly insisted on direct confirmation from the patients....CVS and other drugstores say any delays in the process are because they’re trying to make sure their customers are aware that they had agreed to have their prescriptions transferred. PillPack, on the other hand, maintains that it always gets consent and that the chains are purposely stonewalling to hang on to an outdated, inefficient retail model.
I think that the slow-walking the prescription transfers for customers by CVS and other retail drug stores is a delaying tactic and will be of little value in the long run because it's the legal right of healthcare consumers to have such a request executed. CVS and Walgreens certainly have the resources to actively compete with PillPack with their own programs to increase customer convenience. CVS, for example, has launched their carepass plan for $5/month that provides 1-2 day shipping of prescriptions and a 20% discount on CVS Health brand products. CVS also offers multi-dose strip packaging of drugs at no added cost.
It seems to me that PillPack is a one-trick pony. CVS and Walgreens will almost certainly outlast and outcompete the company by turning their stores into health destinations with a broad set of services (see: CVS Expands Its Healthcare Presence with Its New HealthHUB Stores; CVS's Grand Strategy for HealthHUBs and Aetna Becoming Apparent) in addition to offering the same delivery options as PillPack. One caveat. Amazon has huge resources that could be used to redefine the retail drug industry and I don't know what additional moves the company may make. Jeff Bezos has bested most of his naysayers over the years and he may have other tricks up his sleeve.
Comments