Amazon offers Prime members a deal on generic prescription drugs
Whenever Amazon makes a move in the healthcare space, people take notice. It’s not surprising, given Amazon’s power to disrupt markets. But their forays into healthcare so far have not been transformative, and their new $5-a-month unlimited prescription drug plan, RxPass, for Amazon Prime members doesn’t appear to aim very high. Selling a limited number of low-cost generic drugs cheaply is not a new idea – just ask Mark Cuban. In fact, Walmart and other big box retailers did a similar thing over a decade ago. Here is how this RxPass compares to what has existed in the market:
| Established low-cost generic programs | Amazon RxPass $5 subscription program |
| $4-5 generic drugs for a 30-day supply | $5 monthly subscription covers costs for any of 50+ generics in the program |
| Hundreds of generic products included | Limited generics at this time |
| Claims may flow through individual’s health insurance and apply to plan deductibles and out of pocket maximums | Claims do not appear to flow through an individual’s insurance, do not apply to the PBM clinical and safety checks, and do not apply to plan deductibles and out of pocket maximums |
| Available through both retail and mail order channels (prices will vary) | Only available through Amazon Prime |
It appears that RxPass would function outside of an employer’s medical and drug benefit program and that prescriptions therefore would bypass PBM clinical and safety checks and the program cost would not accumulate to deductibles and out of pocket maximums. RxPass presumably cannot be combined with any insurance benefit, copay assistance program, or other third party financial benefits. According to Amazon, individuals “cannot use their HSA or FSA to pay the RxPass subscription fee.” There are other compliance issues related to HSAs, FSAs and HRAs – as well as potential HIPAA privacy issues -- that should be explored. Further, prescriptions are not available for shipping to every state, and may not be sold to participants of government insurance programs (e.g., Medicare, Medicaid). Another concern is that the program could potentially lead to stockpiling, as refills are unlimited.
Our perspective? RxPass might be a good option for the uninsured or those without coverage for certain therapies, and health plan members may save a few dollars on prescriptions. But this program is not likely to drive significant savings for employer health plan sponsors. For this to happen, a program would need to also include brand or specialty therapies, which are the drug categories driving overall health care trend.