I have gotten very interested in the competition between CVS and Amazon's PillPack for the retail drug market. CVS had more than 9,600 retail establishments in 2016 (see: CVS Pharmacy). It's original business model was the traditional one of "corner drug stores" where prescriptions were dropped off and drugs picked up. The PillPack fulfillment model is virtual -- prescriptions are submitted via a web site and the drugs are delivered back to one's door, often by Amazon Logistics. In response to this business model, CVS began to provide individualized dose packaging and home delivery with Rx Delivery. CVS also began to slow-walk prescription customer transfer requests to PillPack (see: Resistance to PillPack's Requests for Prescription Transfers from Retail Drug Stores).
PBMs are a key element in this retail drug competition because they partly control the retail price of drugs and also have a record of consumers' meds. CVS owns one such major health plan, Caremark. Amazon-PillPack is now seeking to establish its own PBM (see: Amazon-PillPack Pushes Against CVS with Prescription Deliveries; Also Seeking PBM Status). The one missing element in this tit-for-tat discussion is an affiliation with a health plan which, of course, pays for drugs. Recent news is that Blue Cross Blue Shield of Massachusetts (BCBSMA) has developed an app that coordinates a consumer's drug history with PillPack (see: BCBSMA’s new app coordinates meds with Amazon’s PillPack). CVS, of course, already owns a health plan, Aetna. Below is an excerpt from this article:
Blue Cross Blue Shield of Massachusetts is launching a new pharmacy integration app and website that will help members manage prescriptions by using Amazon’s own Internet pharmacy. The new service will enable BCBSMA members who are on multiple medications to seamlessly manage and fill their prescriptions with PillPack by Amazon Pharmacy. PillPack features convenient packaging, modern technology and personalized service. BCBSMA is the first health plan to offer this type of integration with PillPack, the Boston-based health plan reports. Members can use PillPack to order, pay for, track and get prescriptions delivered to their homes.
I believe that the major driver for the retail drug market in the future will be an app with links to a web-based, drug provider like CVS and PillPack and also with close ties to a PBM and a health plan. One special aspect of this future scenario is that CVS has a trump card that PillPack can't match -- a bricks and mortar presence in communities across the country. CVS is capitalizing on this advantage with its HealthHub and MinuteClinic units that will, I believe, evolve as as a major source of primary care. It has been estimated that PCPs account for about 90% of hospital costs via their referrals to specialists (see: PCPs Responsible for Allocating About 90% of Total Hospital Costs). Stay tuned for more developments.
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