Amazon RxPass isn’t for everyone

The news: Amazon Pharmacy launched RxPass exclusively for Prime members, offering a limited number of generic drugs for a flat fee of $5 per month with no limit on the number of prescriptions.

How RxPass works: The RxPass has a few important limitations at the outset, which will limit its impact—at first.

• Only Amazon Prime members are eligible. If they use RxPass for 12 months, that’s $60 on top of the annual $139 Prime fee. Consumers can’t use Health Savings or Flexible Spending accounts to pay the monthly fee, either.
• Medicare and Medicaid beneficiaries aren’t eligible.
• RxPass is available in 42 states. Currently, residents of California, Louisiana, Maryland, Minnesota, New Hampshire, Pennsylvania, Texas, and Washington aren’t eligible.
• The number of prescriptions per month is unlimited, but only if patients take any of the 60 generic medications offered at launch. Conditions treated include allergies, high blood pressure, dementia, mental health, and skin conditions.

The opportunities: Consumers are taking more daily medications than ever before, according to a 2023 poll from CivicScience.

• 70% of consumers take at least one prescription drug per day, up from 56% daily medication users in 2019.
• About one quarter (24%) of US adults now take four or more medications daily, compared with 18% in 2019.
• 24% of consumers who are prescribed medications skipped taking those drugs in the past year due to cost concerns, per the CivicScience survey.
• 70.7% of US households (93.0 million) are Amazon Prime members in 2023 and that number will grow to 74.1% (100.1 million) in 2026, we estimate.
• Amazon got into the direct-to-consumer (D2C) virtual care space in November 2022 with Amazon Clinic, a text-based telehealth service.

The challenges: Amazon Pharmacy’s November 2020 launch caused a great deal of apprehension across the healthcare industry. But major players have since changed their game plans, new entrants have emerged, and Amazon Pharmacy didn’t cause the disruption many feared.

• Pharmacy retailers CVS Health, Kroger Health, Walgreens, and Walmart have significantly boosted their in-store and virtual care services to include primary care, urgent care, and mental health services, among others.
• Online pharmacies like DiRx Health and Mark Cuban Cost Plus Drugs sell a wide range of generic medications for low, transparent prices.
• Pharmacy discount card programs are proliferating. GoodRx was an early leader in this space. It was recently joined by SmartRx, a division of cash-back and coupon platform Smarty, that also gives rebates for doctor and dentist visits, vaccines, and pet meds.

Our take: Amazon’s advantage is its growing number of Prime subscribers. But RxPass’ limitations exclude a lot of Americans, by geography or health coverage—or both.

The majority of US prescription drug spending comes from Medicare and Medicaid programs, which are not eligible for RxPass benefits.

• Medicare prescription drug spending will hit $292.6 billion (47.7% of the US total) in 2023. It will reach $356.4 billion (48.8% share) in 2026, we estimate.
• Medicaid prescription drug spending will hit $83.4 billion (13.5%) this year, reaching $94.4 billion (12.9%) in 2026.
• By contrast, consumer spending on prescription drugs—including co-payments, cost-sharing, and out-of-pocket payments—will be $76.2 billion (12.3%) this year, rising to $96.6 billion (13.2%) in 2026.
• Insurers and employers will pick up the rest, spending $168.1 billion (27.1% share) this year and $183.1 billion (25.1%) in 2026.

And Amazon Prime members aren’t motivated by cheap drug prices, according to a June 2022 report from PYMNTS.com. Most (64%) want free shipping, while only 12% value Prime Video access most. Prescription drugs didn’t make the list.

Go deeper into the digital pharmacy market with our Digital Pharmacies 2022 report.

This article originally appeared in Insider Intelligence's Digital Health Briefing—a daily recap of top stories reshaping the healthcare industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.

• Are you a client? Click here to subscribe.
• Want to learn more about how you can benefit from our expert analysis? Click here.