amazon
Home  »  Community News  »  amazon
Feb
1
Sandeep Singh Dhillon
If Amazon And Buffett Lift Veil On Health Prices, Insurers Are In Trouble – Forbes Healthcare
Pharma Extra, Pharma Notables
0
, , , , ,

By Bruce Japsen , CONTRIBUTOR

Jeff Bezos’ Amazon and Warren Buffett’s Berkshire Hathaway are forming their own healthcare company with JPMorgan Chase to increase transparency for their employees, and that could be bad news for insurers and pharmacy benefit managers.

Health insurance companies and PBMs have long said they want to bring more transparency to the U.S. healthcare system, yet consumers often don’t know the true cost of healthcare. Prices are negotiated in secret and doctors don’t often know what their own services cost or what their patients will be charged.

Details of the new company the three corporate giants want to create remain sketchy, but the idea that they want to bring more transparency is one of the disclosed goals. “Our people want transparency, knowledge and control when it comes to managing their healthcare,” said Jamie Dimon, Chairman and CEO of JPMorgan Chase.

Those who’ve been engaged in the struggle to find the true cost of healthcare have been working for years with limited success. Often times, they have difficulty getting data from health plans or medical care providers.

“Resistance to transparency in healthcare remains high,” says Network for Regional Healthcare Improvement CEO Elizabeth Mitchell, who welcomes Amazon, Berkshire and JPMorgan’s new company. “Employers who pay for this care still don’t have insight into the relative value of what they are buying. They are looking for a way to have assurance that they are paying a fair price for a high quality service.”

The Network for Regional Healthcare Improvement has long said any health reform effort needs to look closely at transparency because data that reveals the total and true cost of care is difficult to find. In a report last year, NRHI said health spending by U.S. commercial insurers can vary by $1,000 or more per year per patient, depending on where enrollees live.

The potential for the Amazon-Berkshire healthcare company to disrupt the way health plans do business is one reason shares of many healthcare companies tumbled Tuesday after the partnership was announced.

Shares of insurers like Aetna, Anthem and UnitedHealth Group lost 5% to 10% of their value while pharmacy chains CVS Health, Walgreens Boots Alliance and drug makers with expensive medicines like Abbvie also took a hit on Wall Street. And the big PBM, Express Scripts, also lost more than 2% of its value Tuesday.

Nobody knows for sure what Amazon, Berkshire and JPMorgan have in mind because they said their effort is in its “early planning stages.” The trio tapped three executives to get the company off the ground: Todd Combs, an investment officer of Berkshire Hathaway; Marvelle Sullivan Berchtold, a Managing Director of JPMorgan Chase; and Beth Galetti, a Senior Vice President at Amazon. No further details were disclosed, including where the company would be located.

Some think Amazon could leverage its technology platform to make a dent in the healthcare cost curve and improve transparency.

“Amazon may spur new technology innovations” such as artificial intelligence or information sharing platforms that “can increase the efficiency of healthcare delivery,” said Idris Adjerid, a management IT professor in the University of Notre Dame’s Mendoza College of Business. “Our research substantiates this potential value. We find that technology initiatives, which facilitated information sharing between disconnected hospitals resulted in significant reductions in healthcare spending.”

Studies show 30% of the money spent on healthcare is waste. Amazon, Berkshire and JPMorgan said the initial focus will be on “technology solutions” that will provide U.S. employees and their families with “simplified, high-quality and transparent healthcare at a reasonable cost.”

But given Amazon’s popularity among consumers and the decades of success Buffett has built with his businesses, the executives say improving patient experience and customer service will also be a target of the new company.

“These businesses understand customer service,” Mitchell of the Network for Regional Healthcare Improvement said of Amazon, Berkshire and JPMorgan. “Reorienting healthcare to being customer focused is exactly what is needed and will require massive and overdue change.”

This article originally appeared at https://www.forbes.com/sites/brucejapsen/2018/01/31/if-amazon-and-buffett-lift-veil-on-health-prices-insurers-are-in-trouble/#6a8a085141c0

Nov
3
Sandeep Singh Dhillon
Amazon should buy these companies if it wants to get into selling drugs – CNBC News
Pharma Extra, Pharma News
0
,

Christina Farr | @chrissyfarr

Amazon is considering getting into the business of selling prescriptions online.
CNBC asked five experts to pick the company that Amazon should buy first to help it compete in the $560 billion market.

Amazon should buy these companies if it wants to get into selling drugs, say experts Amazon should buy these companies if it wants to get into selling drugs, say experts. Amazon is already in a range of businesses that touch on the multitrillion medical sector, including selling surgical equipment and supplies, as well as its cloud software services which many big health-care companies use.

But if it wants to get into selling prescriptions, it might speed its time to market by making a buy-up of a company already in the space. There’s a precedent in Amazon’s $13.7 billion acquisition of grocery store chain Whole Foods earlier this year. Amazon has about $13 billion in cash and equivalents, as of September of this year.

So we asked 5 experts for their predictions on the companies that Amazon might look to acquire if it decides to move ahead with becoming an online pharmacy. Their answers have been edited for brevity.

Prediction: Premier

Scott Barclay, partner at venture fund DCVC and former vice president at e-prescription software provider Surescripts.

What is it? A group purchasing organization created to allow hospitals and other providers to pool their purchasing power to secure discounts on medical and other hospital supplies.

Why? According to Barclay, it’s a no-brainer for Amazon to buy a group purchasing organization or “GPO.” And Premier is the largest in the U.S., with a network of more than 3,750 U.S. hospitals and 130,000 other providers.

What’s in it for Amazon? “It’s a low-cost way to break into the (drug) supply chain that touches a large chunk of health care GDP,” Barclay said. “Amazon would quickly create a multibillion-dollar business without fundamentally taking on much risk or even being very innovative.”

Another benefit, according to Barclay, is that it buys Amazon time. It could pick and choose if it wants to go after more challenging opportunities like data and informatics, care provision and health insurance.

Any cons? Premier, which went public in 2013, wouldn’t come cheap — it’s currently got a market cap over $4 billion, and revenue jumped 15 percent to $1.16 billion in fiscal 2016. It has also been on a buying spree of its own of late to strengthen its market position.

Prediction: Express Scripts

Dr. Mark Frisse, Department of Biomedical Informatics at Vanderbilt University Medical Center and former chief medical officer at Express Scripts.

What is it? Express Scripts is the largest pharmacy benefits manager in the United States. These companies, known as PBMs, act as intermediaries between payers, like health insurers, and the rest of the health system.

Why? The culture fit. Amazon and ExpressScripts have a lot in common, according to Frisse. “These companies have the same business acumen, market discipline, and mastery of logistics and delivery.”

ExpressScripts could take on a job that Amazon might want to avoid, suggests Frisse. “Its team brings to the table the capabilities of managing a Byzantine and arcane process of pharmacy regulation,” he said. As Express Scripts CEO Tim Wentworth told analysts in July, it’s far more complicated than just dispensing drugs. Entering the business, “requires you to figure out how not to dispense drugs or to dispense the right drugs as much as it does to dispense them.”

Why not? It would be a massive purchase — Express Scripts has a market cap of more than $35 billion, more than twice the price Amazon paid for Whole Foods, and the company would have to borrow to take that on. It might be an easier option for Amazon to buy a small or midsized pharmacy benefits manager at a lower price, and still gain the national footprint and regulatory expertise.

Prediction: Glooko

Nina Kjellson, Canaan Partners’ biotech and health IT investor (note: Glooko is a Canaan portfolio company).

What is it? Glooko is a subscription-based diabetes management web and mobile app for patients and their health providers. It claims to have millions of users worldwide.

Why? Kjellson sees Amazon having a big impact in public health, especially in areas like obesity and diabetes. With Amazon already starting to sell medical supplies online, Kjellson sees the company carving out a big business in diabetes prescription medications and glucose meters/ strips, which is a $70 billion market and growing. “So Amazon should pick up a diabetes management platform like Glooko to have a consumer and health-care solution that ties the entire disease management ecosystem together in a great, consumer experience.”

Another bonus? As Amazon gets into the grocery business in the wake of its Whole Foods buy-up, it could consider personalized meal recommendations — a benefit for millions of people managing chronic conditions like Type 2 diabetes.

Why not? Privacy. Amazon already knows so much about its customers through their buying habits. Some users might be uncomfortable sharing their health status. Moreover, managing populations with chronic diseases is not Amazon’s core competency.

Prediction: GoodRX

Annie Lamont, managing partner at investment firm Oak HC/FT.

What is it? GoodRx offer coupons that consumers can take to the pharmacy to get discounts on prescription drugs. It claims to have lower prices than what a consumer would otherwise pay out of pocket.

Why? “It’s the most successful consumer-facing app for prescription drugs that is focused on comparing and giving the consumer the lowest cost,” said Lamont. And that’s an ideal fit for Amazon, which prides itself on transparency. GoodRx founder Doug Hirsch has also publicly stated that he would welcome Amazon’s long-rumored entry into the space.

Why not? “Valuation,” suggests Lamont. GoodRx hasn’t raised much in funding — $1.5 million in seed financing and an additional follow-on sum that hasn’t been disclosed — but has grown quickly since its 2012 launch and established itself as one of the biggest players in the space.

Any big risks? GoodRx has contracts with pharmacy benefits managers and retailers behind the scenes, explains Lamont. So there’s always a risk that they pull out, if they’re feeling threatened by Amazon.

Prediction: PillPack

Stephen Buck, co-founder of cancer-advisory site Courage Health and co-founder of GoodRx.

What is it? Pillpack is an online pharmacy start-up that delivers prescriptions by mail in personalized packets, based on when the user needs to take them.

Why? If Amazon got into the business of selling prescription drugs, PillPack seems like an obvious pick to Buck. “It’s a direct-to-consumer company that would fit nicely into Amazon’s Prime delivery service,” he said.

A good deal: PillPack also isn’t encumbered by a large retail operation, Buck said, meaning it doesn’t have a huge network of brick-and-mortar pharmacies. For that reason, it might also be “relatively cheap to buy,” he suggests, despite that it has raised more than $117 million in financing from venture investors to date.

Why not? The product might be too niche for Amazon, suggests Buck. “The whole experience including the packaging might only appeal to a certain segment of people who take multiple medications.”

Read full article here https://www.cnbc.com/2017/11/02/amazon-pharmaceutical-move-acquisition-targets.html?lipi=urn%3Ali%3Apage%3Ad_flagship3_feed%3B%2BaGvcVckQQi8j8AOTm8tcg%3D%3D

Oct
23
Sandeep Singh Dhillon
Amazon Is About To Disrupt The Drug Industry, But Not The Way Most Think – Forbes
Pharma Extra, Pharma Notables
0
, , ,

By Steve Brozak, CONTRIBUTOR

It’s now a foregone conclusion that Amazon.com will enter the healthcare sector. Every day there is another article on how Amazon is planning to dominate some new corner of the American economy. One day Amazon is taking down Grainger and Home Depot. The next it’s single-handedly taking down not only FedEx, but also UPS and the United States Postal Service. No sector seems safe as Amazon sails its ship into new waters. But those expecting Amazon to cannon ball into healthcare may need to bide their time.

Two years ago I wrote in Forbes about how Amazon’s entry into healthcare could decimate CVS and Walgreens. I think it’s still possible, but not in the way the markets and media are anticipating today. Amazon’s entry into healthcare will not be sudden. It is likely to be similar to the acquisition of Whole Foods which developed over years as Amazon evolved its strategy in home grocery delivery, one part of the incredibly valuable consumables market. It was accomplished through trial, error and recognition that Amazon needed a bricks and mortar approach to the segment that led to the Whole Foods acquisition. Sudden and complete immersion into the healthcare system as it currently exists could taint the Amazon brand and will make the company vulnerable to regulatory risk. But there are segments of the healthcare market that offer an opportunity for Amazon’s unique capabilities, and there is evidence that Amazon has been making those slow and steady moves toward healthcare.

Becoming A PBM Could Be Amazon’s Healthcare Market Entry

Pharmacy Benefit Managers are the gate-keeping middlemen of the healthcare system. PBMs administer health plans for insurance companies and employers. They manage benefits and treatment costs for these organizations. The more organizations a PBM services, the greater number of patients (or lives, in insurance lingo) under its umbrella. With more lives comes more leverage when a PBM negotiates with pharmaceutical manufacturers for drug prices.

The three largest PBMs are Express Scripts, CVS and OptumRx, covering more than 80% of insured Americans. A PBM that manages tens of millions of lives has greater purchasing and negotiating power than a standalone company with 3,000 employees, or a pension plan with 20,000 lives, or even an independent insurance plan with just a few million lives. Among a slew of other services, PBMs primarily work with their clients to construct and administer a pharmacy benefit program, which is often referred to as a drug formulary. Formularies are just the lists of drugs that are approved or that have preferred pricing for the insurance company through a PBM’s negotiations with the drug’s maker. In exchange for placing its drug on formulary, a PBM receives a preferred price and a cash rebate from the drug’s manufacturer for every prescription it processes. Your insurance plan’s formulary is a major reason why your doctor prescribes you one drug company’s medicine over a competitor’s. Being the preferred drug is the goal. PBMs share a portion of the rebate it receives with their clients (the health plans) and patients receive the benefit of a drug at a preferred price. PBMs also collect fees for transactions and services it processes for its clients.

Target and Walmart learned that merely selling pharmacies in their bricks and mortar operations or through the mail doesn’t equal profits, although a case can be made that it certainly increases foot traffic and store loyalty. Margins are incredibly thin for the kinds of drugs they sell most routinely. In fact, Target sold its in-store pharmacy business to CVS, a pharmacy and a PBM, and Walmart has partnered with McKesson to source its drugs. Becoming a full service PBM would have allowed Target and Walmart to have greater control over margin, but it wasn’t in the cards for either company. While becoming a PBM could be the key to unlocking profits for Amazon, the current political and social environment is unfriendly toward PBMs and drug makers and comes with its own risks.

Despite this, a gamble in healthcare has to happen sooner rather than later. Amazon’s primary customer is between 30 and 45 years old, and that’s a demographic that will soon be looking to fill more and more prescriptions. And if you don’t think their customers’ life cycle milestones are part of retailers’ strategic plans, just look at the pace of acquisitions around baby startups just under a decade ago. Amazon bought diapers.com while Bed Bath & Beyond acquired Buy Buy Baby. Finding an algorithm that figures out when you’re going to have a child before you even think of having one yourself is the holy grail of E-commerce. The birth of a child is a significant milestone around which there is a burst of spending to capture. Likewise, as its consumers age and continue to change their habits through online shopping, healthcare has become the next frontier. Amazon has already made an entry and is setting prices for over the counter medications (OTC). On average, its OTC products, like Tylenol, are cheaper on its website than most bricks and mortar stores. There are several theories circulating around Amazon’s entry into healthcare. Here are my thoughts on three of the most common scenarios being discussed.

Scenario 1: Amazon Acquires Or Partners With A Large PBM

One of the more popular scenarios bandied about is that Amazon may acquire a large PBM player. This is unlikely for a few reasons. Foremost, while it would allow Amazon to quickly enter the healthcare market, integrating the processes and services from a large operation into Amazon would be complicated and chaotic. As the drug pricing debate continues in the mainstream, PBMs have been painted with a big target on their backs as more light is thrown on their opaque and very misunderstood segment of the healthcare system. Just this week, Senator Lamar Alexander (R-TN) wondered out loud why PBMs even need rebates, which is the lifeblood of the industry.

It will be very difficult to recreate the frustration-free consumer experience Amazon currently offers and replicate it through healthcare services as healthcare currently exists. Therefore Amazon will want to separate any healthcare services it offers from its main brand and ease into the business. You could argue that Amazon is already easing in by selling prescription drugs on their Japanese website, perhaps a test case for an American entry (supporting the case for Scenario 3). If you think Amazon can do no wrong, remember this is the company that thought it would be a good idea to emblazon Amazon.com on the back of its Fire Phone, a complete flop. Amazon can’t afford a flameout in healthcare, and making another transformative purchase that could easily eclipse the purchase of Whole Foods so soon, while entirely possible for a company the size of Amazon, would be wholly inadvisable.

As far as partnering goes, sure, Amazon could attempt to partner with a Prime Therapeutics or an Express Scripts. As others have pointed out, Amazon has a strong history of partnering with companies, leveraging its consumer reach and logistical magic to tap into and offer lifelines to companies like Circuit City and Toys R Us. But then what happened? The companies Amazon partners with tend to go out of business as Amazon upends the market.

Scenario 2: Amazon Re-engineers The Wheel With A Smaller PBM

It’s clear that Amazon needs to either re-engineer the PBM wheel or partner with a creative player who already is. While a partnership with a conventional middle market PBM will give Amazon a good entry point in healthcare, a better route would be to partner with an even smaller PBM to really learn the business, gain valuable insights on the industry and bring the PBM model into the 21st century. There are already reports that Amazon, with its 350,000 employees, is trying to administer its own health plan internally as its own PBM. While hiring executives from industry to construct its own virtual PBM is a good way for Amazon to start, it’s still just virtual. An even better path forward would be to acquire or partner with a smaller PBM that already manages millions of lives, self adjudicates (processes its own claims) and can easily manage an additional 350,000 Amazon employees. Through the smart acquisition of a creative PBM, Amazon would learn the business model and incorporate a PBM-like service into an expanding slate of healthcare programs and service offerings.

Scenario 3: Amazon Becomes A Bricks And Mortar Pharmacy In Order To Become A Mail Order Pharmacy

Amazon is well positioned to enter the mail order pharmacy business. Most mail order services are contracted out to a handful of other pharmacies that specialize in mail order delivery. For a while, insurance companies preferred their patients to enlist in a mail order pharmacy because the pricing was competitive compared to going to CVS or Rite Aid. Over the last several years that gap has narrowed. But mail delivery is what Amazon does very well, and combining a mail delivery strategy with a bricks and mortar strategy makes an incredible amount of sense for the company, especially now that it has acquired Whole Foods.

Before acquiring Whole Foods, it never made sense for Amazon to build or to acquire a network of independent pharmacies. Since none of the Whole Foods stores have a pharmacy, Amazon has an opportunity to establish in-store pharmacies that are powered by mail order fulfillment centers. A bricks and mortar strategy should be based around having an in store pharmacist fill as few prescriptions as possible. Rather, a regional prescription fulfillment center could fill and deliver the majority of prescriptions to both the store and to the patient’s doorstep. This is not unlike the current pharmacy model whereby local bricks and mortar pharmacists fill immediately needed prescriptions in the store, while chronically needed medications are filled and delivered to the store by a regional fulfillment center for monthly pickup by the patient. A model in which Amazon combines its mail delivery capabilities with its Whole Foods bricks and mortar would begin to draw two-way traffic from the stores and onto Amazon’s website. As patients sign up and manage their medications, they would create an essential link between the virtual and bricks and mortar Amazon. Shopping for eggs at Whole Foods isn’t going to compel me to go to Amazon.com no matter how many signs Whole Foods hangs in its stores to remind me that they’re now owned by Amazon. But managing my pick up/drop off of medications at my local Whole Foods through my Amazon health portal would draw me into both. Amazon seems to understand this and has already begun to blend its online business in Whole Foods by placing its innovative pick up/return locker system in Whole Foods lobbies.

Of course, while a current generation of Americans prefer to have the personal touch of interacting with and picking up their prescriptions, the trend will soon be to have most drugs delivered by mail. I have even evaluated companies that are working on fill-on-demand drug dispensing vending machines, which may also one day make their way into Whole Foods stores (let’s call them Locker 2.0). To date the one area of true weakness for mail order pharmacy services has been providing essential prescriptions immediately, say, on the day a patient is discharged from the hospital. That’s a weakness Amazon could easily topple with its tests of Prime Now, its same-day two-hour delivery service, another incremental step as Amazon inches toward the healthcare market.

Amazon’s customer base may be young, averaging 35 years old, but they are aging and in the midst of the child-rearing cycle, which requires frequent trips to the pharmacy. Amazon’s customers will need more prescriptions for themselves and for their children. Soon an entire generation will be even more used to buying things online. Right now Amazon has announced it is preparing to make two very big decisions public. The first is whether or not it will get into healthcare, to be announced, supposedly, sometime around Thanksgiving. The second is where it will locate its second world headquarters. If Amazon wants to capture as much of the purchasing a customer can do, it will need to mature with its consumers and formally enter into the healthcare market.

And as for my prediction for Amazon HQ2: It’s Boston.

May
19
Sandeep Singh Dhillon
Jeff Bezos’s Amazon Wants a Slice of the Multi billion-Dollar Pharmacy Market – INC.com
Pharma News, Pharma Notables
0
, ,

Jeff Bezos’s company is reportedly looking to expand its portfolio to the multibillion-dollar pharmacy market.

Over the past few years, Amazon has held “at least one annual meeting” to evaluate whether it should jump into the pharmacy space, according to CNBC citing sources familiar with the matter. Two weeks ago, Amazon posted a new job looking for a “PHC [Primary Home Care] Licensing Program Manager” to support its “Professional Healthcare Program.” Responsibilities include submitting state license applications and maintaining “documents and databases for state board of pharmacy licensing requirements,” according to the job description. The company didn’t immediately respond to a request for comment.

Amazon also recently announced its plans to hire 5,000 home-based workers to join its customer service teams. The majority of those jobs will come with benefits like health insurance, sick and vacation time, and tuition.

Jeff Bezos’s Amazon empire has expanded into food retail (Amazon Fresh), video streaming services (Amazon Prime), web hosting (Amazon Web Services). It’s also jumped into the rocket ship race with Blue Origins. Last month, Amazon announced its plan to roll out operations in Australia, where online sales are expected to account for more than a third of the country’s retailers’ sales. At last count, the company has invested or acquired more than 128 companies in the last few years.