Health Tech, Payers

With telehealth, pharmacy offerings, Amazon starts to encroach on PBMs

As Amazon starts to roll out its telehealth and pharmacy offerings, most big health systems and insurers don’t yet view it as a threat. But pharmacy benefit managers and vertically integrated payers will be keeping a watchful eye on the company as it starts to encroach on a slice of their business. 

As Amazon continues its push into healthcare, most big health systems and insurers don’t yet view it as a threat. With its foray into mail-order pharmacy, and more recently, telehealth and in-home care, Amazon has everyone’s attention. But it’s not yet clear whether the company will dramatically shake up the market, or if it will be yet another vendor competing for health plans’ attention.

Earlier this month, Amazon opened its telehealth service for employees, called Amazon Care, to other companies in Washington state. Later this summer, the retail giant plans to sell it as a covered benefit to businesses in all 50 states.

It also plans to more gradually roll out an in-home care component, where providers can visit patients’ homes for a visit or routine lab draws.

To get there, Amazon will have to unseat whatever telehealth vendors companies already have in place. In a recent survey of 52 benefits executives conducted by JPMorgan, 96% of them were already offering telehealth services, and most of them said it was important to work with vendors that had a comprehensive offering.

“If they are successful in engaging with employers, self insured health plans for example, there could be a significant opportunity,” said Christopher Guinther, director of pharmacy benefits at Bon Secours Mercy Health, in a panel hosted by BTIG.

But telehealth companies won’t be the only ones watching Amazon’s next moves. Big insurers and pharmacy benefit managers might also see Amazon’s actions as encroaching on their turf, he said.

“The challenge is the big third-party payers out there — the Anthems, the Uniteds, the Aetnas of the world — who may hold that contract hostage,” Guinther said. “Will they preclude employers from participating in these types of arrangements, or offer some sort of penalty that they’re not in that network?”

For instance, UnitedHealth’s Optum has made significant investments into its own physician group. CVS, which has been building out in-store clinics and integrating them with subsidiary Aetna’s health plans, is likely also hearing Amazon’s footsteps.

For the most part, patients who are going into a MinuteClinic are still going for relatively simple health needs, such as an ear infection or a sinus infection. They often end up forming affiliations with local health systems, Guinther said. Could Amazon do the same thing — and make it even more convenient?

“If you have a preferred medical network under the Aetna branch and that patient goes ‘out of network’ with Amazon Care, perhaps they need a prescription, and that prescription is filled through Amazon Pharmacy — how does that sit with a vertically integrated payer that offers medical services, pharmacy services and infusion services?” Guinther said. “(Amazon) might start coming on their turf, if you will.”

Still, Amazon has a lot to prove. Its pharmacy plan, where it offers mail-order prescriptions and a drug discount program administered by Express Scripts, isn’t expected to be a big disruptor. Of the surveyed benefits executives, 44% expected it to have “minimal or no impact.” Since it can’t ship schedule II drugs, many prescriptions and specialty medications will still reside in brick-and-mortar pharmacies.

It’s also not clear how many patients are asking for their prescriptions to be sent to Amazon Pharmacy. Just a fraction of a percent of Bon Secours Mercy’s members are currently using it, Guinther said.

Michael McTigue, corporate vice president of information technology for St. Barnabas Medical Center, also puzzled over where Amazon will refer patients when they need an MRI, an EKG, or to see a specialist.

“They have the capital, they’re getting the subject matter experts they need to get into healthcare, and they will continue to grow. They’re an absolute player in the market. How successful they’ll be and where they go remains to be seen,” he said. “Would they keep me up at night? Not now, but in the future, they may.”

Photo credit: Flickr, Cerillion Skyline