Amazon is trying to disrupt the pharmacy business, but the industry’s incumbents aren’t willing to simply assist Amazon in killing them off. Now a minor war has broken out over the ability to share information on patients across prescription providers. Joseph Walker reports for The Wall Street Journal:
Amazon.com Inc. AMZN -1.25% ’s foray into the pharmacy business is causing the company to clash with entrenched industry incumbents that are putting roadblocks in front of the company’s growth plans.
Last week, Surescripts LLC, a provider of the technology widely used to route electronic prescriptions, accused Amazon’s mail-order pharmacy subsidiary PillPack of receiving patient data that it had fraudulently obtained through a third party. Surescripts went public with the allegations in a news release.
PillPack, which caters to patients taking multiple medications, denies any wrongdoing. PillPack accessed Surescripts’ database via a third-party software vendor, ReMy Health Inc., to retrieve the medication histories of its customers who had explicitly authorized PillPack to obtain the information, said PillPack spokeswoman Jacquelyn Miller.
Surescripts, whose technology is used to route electronic prescriptions to pharmacies, said on Monday it referred the matter to the Federal Bureau of Investigation for further investigation. An FBI spokeswoman declined to comment, citing agency policy to neither confirm nor deny the existence of any investigation.
The dispute with Surescripts is an example of the challenges that PillPack faces in disrupting the $424 billion U.S. prescription drug market: In many cases, PillPack’s competitors are also gatekeepers that control access to patient data and payment rates from insurers.
Surescripts allows doctors and hospitals to purchase access to their patients’ medication history. The company is owned by a consortium that includes CVS Health Corp. and Cigna Corp.’s Express Scripts. CVS and Express Scripts are the largest managers of prescription drug benefits in the U.S., covering a combined 175 million people, in addition to operating large mail-order pharmacies.
“The competitive backdrop is Amazon trying to get into this market and you’re seeing points of pressure from the incumbents who don’t want to make it any easier,” said Michael Newshel, an Evercore ISI analyst.
Read more here.
Jeremy Jones, CFA
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