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October 31, 2017

Amazon now has wholesale pharmacy licenses in 12 states. What's next?

Daily Briefing

    Over the past year, Amazon has received approval from 12 state pharmacy boards to become a wholesale pharmacy distributor—increasing speculation that Amazon may be looking to enter the pharmacy industry.

    The states that Amazon has acquired a wholesale pharmacy license in include:

    • Alabama;
    • Arizona;
    • Connecticut;
    • Idaho;
    • Louisiana;
    • Michigan;
    • New Hampshire;
    • New Jersey;
    • Nevada;
    • North Dakota;
    • Oregon; and
    • Tennessee.

    Amazon's request for a wholesale pharmacy license remains pending in a 13th state, Maine. The licenses are generally linked to three Amazon fulfilment facilities in Indianapolis, the St. Louis Post-Dispatch reports. However, according to Nicodemo Fiorentino, an attorney in New Jersey who initially spotted the wholesale pharmacy licensing requests, Amazon would need to acquire additional licensure before it could start shipping prescription drugs or devices directly to consumers.

    Industry speculation

    According to the Post-Dispatch, industry analysts in the past few weeks have speculated that Amazon may try to move into the pharmacy business. For instance, CNBC several months ago indicated Amazon was hiring staff to break into the industry, which represents a $25-$50 billion business opportunity for the company. In addition, Amazon recently began selling medical devices and medical equipment online as well as pharmaceuticals and cosmetics in Japan through its Prime Now delivery service.

    However, it remains unclear whether Amazon's latest regulatory filings for wholesale pharmacy license indicate an official move into the drug supply chain industry, the Post-Dispatch reports, or—if it does—whether the company will try to partner with an existing pharmacy benefit manager (PBM) or establish itself as a PBM. In a statement emailed to the St. Louis Post-Dispatch, a spokesperson for Amazon refused to comment on what they said were "rumors and speculation."

    Nonetheless, Amazon's license acquisitions created immediate effects in the stock market, with prices for CVS Health, Rite Aid, and other businesses in the pharmacy industry declining after the news broke (Bowden, The Hill, 10/26; Liss, St. Louis Post-Dispatch, 10/27).

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