What kind of impact could Amazon have if the ubiquitous company enters the mysterious and complicated world of pharmacy benefit managers?
The online retailer is reportedly exploring the pharmacy business and, as part of the plan, may build an internal PBM for its own employees, but later roll this out to the world at large. The possibility is intriguing because it comes at a time when these middlemen — which negotiate with drug makers for favorable insurance coverage — are under varying degrees of financial and political pressure.
As controversy escalates over the rising cost of medicines, PBMs are taking their share of criticism for purportedly contributing to the problem. Typically, PBMs extract rebates from drug makers in exchange for favorable insurance coverage, but there is a lack of transparency about the extent to which rebates are passed along to health plans and employers. Pharmacies also say PBMs unfairly charge various fees.
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After Bezos has negotiated my deep drug discount will Jeff please rev up the Amazon drone to drop my drugs on my front lawn?
Amazon and or any other company (e.g. Walmart), hospitals e.g. Cleveland Clinic or Mayo Clinic with large employee base can be a PBM. They can negotiate prices by encouraging manufacturers to use the best technologies to produce the lowest cost products there by making drugs affordable. They also can use the experience to be the PBM’s for other companies. That would be a challenge to the existing PBMs. Target and CVS looked at such methods but I believe they got cold feet as they could not sell internally.
Planning to be their own PBM might be the next step in ‘self insurance’ for medical benefits. Planning to be the world’s internet pharmacy will be a big jump.