Can Amazon Really Drive Employer Rx Costs Down?

Friday, November 15, 2019

Amazon’s recent acquisition of Whole Foods has increased speculation that the online giant is preparing to enter the prescription drug market. Some, like CNBC, think Amazon will disrupt the industry, lowering costs for consumer and profits for retails chains, independents, and pharmacy benefits managers (PBMs).

US Rx Problem

US drug spending reached $450 billion in 2016 (QuintilesIMS Institute). Employers shoulder a large burden of these costs, which have been rising at a greater percentage than medical expenses over the past few years (PWC). Consumers are also paying more out-of-pocket to cover medications than in previous years.

Recent price hikes for drugs like EpiPen and insulin are fueling cries for tougher controls and much needed transparency. Will Amazon’s entrée into the market accomplish these goals?

Pharmacy and outpatient costs will likely take up a larger portion of employer health spending in 2018 versus 2008

Will Amazon Deliver Transparency?

The Silicon Valley player is known for disrupting established industries from books, groceries, and electronics to anything you can think of, as well as for expertly managing vast quantities of data. The drawback is that Amazon will actually add another silo of data to the already fragmented world of benefits management.

Amazon will have limited data, so the giant won’t be able to deliver critical insight like:

  • What you’re spending on injectable medications administered in a hospital or outpatient setting
  • The point-of-purchase cost differences for prescriptions not filled by Amazon
  • What prescriptions are going unfilled by your members.

Integrated Data Delivers True Transparency

To understand what is driving your pharmacy costs, you need to integrate medical and pharmacy data across all payers in real-time. Creating and using a full “view”of your claims data permits a better understanding of how participants are using their benefits and whether there are opportunities to address issues before they become bigger problems.

Bend Your Rx Cost Curve

There is no doubt that Amazon entering the prescription drug market could revolutionize how we pay for prescription medicines. But as a plan sponsor, you need to be able to track your prescription drug spend to make sure you’re providing the best options for you and your members. Integrating your data will deliver deep insight you can use to make lasting impact across all your benefits programs.

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