Amazon to buy Somerville online pharmacy startup PillPack

PillPack prepackages and mails consumers pills.									Pat Greenhouse  The Boston Globe

Founded in 2013, Boston-based PillPack is an online pharmacy that ships pre-packaged doses of medication straight to customers' doors. CVS a year ago had about $45.7 billion in revenue from its mail order pharmacy business, accounting for about 15 percent of its pharmacy claims.

Earlier this week, Amazon announced that it hired respected physician and author Atul Gawande to head up the healthcare initiative it launched with Berkshire Hathaway and JPMorgan Chase in January with the goal of providing "high-quality and transparent health care at a reasonable cost". It has also developed pharmacy software that helps coordinate refills, makes sure the shipments are on time, and provides an online dashboard for patients.

"We already have the capabilities that PillPack is offering and we have scale in the business", a company representative told CNBC. CVS is buying insurer Aetna for while Cigna, another insurer, is scooping up pharmacy benefits manager Express Scripts.

"We are not particularly anxious", Pessina said, but added that the company was not complacent either.

"The health care space and pharmaceutical space in particular are very complex, nuanced markets", Lekraj said. "We're excited to see what we can do together on behalf of customers over time", said Wilke. "The Street will view this Amazon move as the beginning of the threat, not the entirety of it".

"With Amazon + PillPack this eliminates the need to stand in line at the pharmacy which may help overcome past barriers, especially if that patient has issues with mobility or transportation", said Forrester Analyst Arielle Trzcinski.

He said PillPack could be kicked out of current PBM networks, "especially if Amazon has designs of significantly ramping its prescription volume". The two reached an agreement a month later. The online retail giant outbid rival Walmart Inc.to win PillPack, Bloomberg reported on Thursday. Amazon now sells over-the-counter drugs through a partnership with Perrigo It also has pharmacy licenses in a number of states, in addition to being fully licensed to distribute medical devices across the United States. Customers using the platform pay a monthly service fee, which is often covered by insurance companies including Medicare Part D.

If Amazon can carve a $15 billion chunk out of just three companies with a $1 billion deal, just think of the damage it could inflict once it starts throwing around more money.

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