Amazon launches $5-a-month unlimited prescription plan

Health

(CNN) — Amazon is expanding its push into healthcare with a $5 monthly unlimited delivery pass on 60 common generic prescription drugs treating allergies, inflammation, high blood pressure and other conditions.

Amazon announced the new delivery service, RXPass, on Tuesday and it will launch immediately in most states except California, Texas, Minnesota and others with specific prescription delivery requirements. Customers who are enrolled in Medicare, Medicaid, or any other government health care program will not be able to sign up for the benefit.

The program is likely to save customers money on low-cost generic drugs but won’t impact prices for more expensive brand-name drugs, which drive the bulk of US prescription drug spending, say health care analysts and economists. They also expect Amazon to lose money on the service but see other benefits.

The $5-a-month delivery pass is an add-on to Amazon Prime, Amazon’s $139 annual program, and is available exclusively to Prime subscribers regardless of their insurance status.

Amazon has long offered a Prime prescription savings benefit to get discounts on generic and brand-name medications. The company said its new generic delivery program targets customers who take multiple prescriptions to manage chronic conditions and pay out-of-pocket costs for their medications.

Some of the generic drugs included in the program include Bupropion, Cephalexin, Doxycycline, Estradiol and Sertaline.

Although generic drugs represented around 86% of all US prescriptions in 2022 by volume, they made up just 20% of prescription drug spending, Evercore analyst Elizabeth Anderson said in note to clients Tuesday.

“The set of generics in Amazon’s new program represent 32% of generic drugs in 2021, and is likely a loss leader for Amazon,” she said, calling it an “incremental pharmacy experiment” for the company.

Amazon has focused its efforts on generics because it’s harder to compete with health insurers and other companies on branded and specialty drugs, she said.

Sean Nicholson, the director of the Sloan Program in Health Administration at Cornell University, believes that Amazon is introducing the generics program to boost Prime membership subscriptions, compel customers to switch to Amazon for higher-margin branded drugs, and get them to spend more on other products when they use the program.

Amazon’s new plan will mean consumers may see lower costs for some generic drugs, Nicholson said. But “it’s not going to do much, if anything, to push down spending on drugs that don’t face generic competition.”

RXPass is Amazon’s latest move to draw more healthcare spending from customers.

The company bought online pharmacy PillPack in 2018, launched its own Amazon Pharmacy in 2020 and last year launched a virtual health care clinic. The company last year also agreed to buy One Medical, a primary care provider, for $3.9 billion. That deal is awaiting regulatory approval.

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