The comedian Dana Carvey once asked the question, “Don’t you love the pharmacy?” The 5-minute bit that followed highlighted all the awkward, confusing, and often frustrating elements of the pharmacy experience. The audience was with him the whole time.
Whether or not Amazon CEO Jeff Bezos watched Carvey’s show, many in the industry agree that pharmacy is primed for disruption — starting with home delivery. In fact, despite the best efforts of a group of companies called pharmacy benefits managers (PBMs), such as CVS Caremark and Express Scripts, mail order pharmacies only fill a paltry 1 out of every 10 prescriptions. Most of the 4 billion prescriptions dispensed in the U.S. every year are filled at one of 60,000 retail pharmacy locations.
That should seem surprising, as the vast majority of prescriptions are refills of ongoing medications. And that makes it ideal for home delivery. So a recent report that Amazon had acquired pharmacy wholesaler licenses sparked a major wave of excitement in the industry. After all, Amazon had hinted at their potential ambitions last spring when they contacted several industry experts about pharmacy and PBMs, as reported by CNBC. Speculation was further fueled by the acquisition of Whole Foods. A retail base coupled with mail order could be an attractive pharmacy or foundation for a PBM. Add these new so-called pharmaceutical wholesaler licenses into the mix and all the pieces seemed to be coming together. Except that it isn’t. At least not yet.
The reported pharmacy wholesale licenses that Amazon acquired in 12 states is not a clear signal that the company is entering the pharmacy or pharmaceutical distribution business. The licenses Amazon applied for happen to cover the distribution of medical-surgical equipment, devices, and other healthcare related equipment, a business they are in today. The confusion results from the fact that states lump many types of distributors together in the same databases, using the same licensing forms.
What many of the ensuing media reports failed to mention is that becoming a pharmaceutical distributor or pharmacy entails additional licensure at both the state and national level. If Amazon was entering the pharmaceutical distribution business they would need to become a “Verified Accredited Wholesale Distributor” (VAWD) by the National Association of Boards of Pharmacy (NABP). Amazon is not one of the 607 VAWD certified facilities. The laws in Indiana require VAWD certification prior to operation. Bottom line: Amazon doesn’t have any licenses to distribute or dispense prescription medications, in Indiana or any other state.