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Amazon About-Face On Drug Sales Not Surprising To Walgreens And CVS

News Amazon is backing away from an effort to sell drugs to hospitals doesn’t come as a surprise to retail drugstore chains Walgreens Boots Alliance, CVS Health and distributors in the specialty pharmacy business.

CNBC reported Monday that the online retailer Amazon has “shelved a plan to sell drugs to hospitals” citing “complexities around selling in bulk to large hospitals and building a logistics network to handle pharma delivery.”

Tyrone’s Commentary:

Amazon is bailing on selling prescription drugs due to complexities associated with the drug supply chain? I don’t know if it’s true, but the statement illustrates just how complex the U.S. pharmacy reimbursement and distribution system is for even the smartest companies. Amazon bails and you think you can manage pharmacy benefits efficiently by reading a blog post or watching a webinar or two? Don’t kid yourself. 

But it’s not like CVS and Walgreens didn’t warn of the complexities of getting into the business of selling and processing prescription drugs, particularly specialty prescriptions shipped to hospitals and clinics.  “There are many barriers to entry when you’re looking at pharmacy,” CVS CEO Larry Merlo said in August of last year during a call with analysts.

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Tyrone Squires, MBA, CPBS

I am the proud founder and managing director of TransparentRx, a fiduciary-model PBM based in Las Vegas, Nevada. We help health plan sponsors reduce pharmacy spend, by as much as 50%, without cutting benefits or shifting costs to employees.

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