Amazon is expanding its push into health care with $5 a month unlimited delivery of 60 common generic prescription drugs to treat allergies, inflammation, high blood pressure and other conditions.
On Tuesday, Amazon announced a new delivery service, RXPass, that will launch immediately in most states except California, Texas, Minnesota and others with specific prescription delivery requirements. Beneficiaries who are enrolled in Medicare, Medicaid or any other government health care program will not be able to apply for benefits.
The program is likely to save customers money on low-cost generic drugs, but will not affect the prices of more expensive brand-name drugs, which drive most of the cost of U.S. prescription drugs, health analysts and economists said. They also expect Amazon to lose money on the service, but they also see other benefits.
The $5-a-month shipping card is an add-on to Amazon Prime, Amazon’s $139 annual program, and is available exclusively to Prime subscribers regardless of their insurance status.
Amazon has long offered Prime Prescription Savings benefits to get discounts on generic and brand-name drugs. The company said its new generic delivery program targets customers who fill multiple prescriptions to treat chronic conditions and pay out-of-pocket costs for their drugs.
Some of the generic drugs included in the program include bupropion, cephalexin, doxycycline, estradiol, and sertaline.
While generics accounted for about 86% of all prescriptions in the U.S. in 2022 by volume, they accounted for only 20% of prescription drug spending, Evercore analyst Elizabeth Anderson said in a note to clients on Tuesday.
“The generics pool in Amazon’s new program represents 32% of generics in 2021 and is likely a loss leader for Amazon,” she said, calling it a “phased pharmacy experiment” for the company.
Amazon has focused its efforts on generic drugs because it is harder to compete with health insurers and other companies on branded and specialty drugs, she said.
Sean Nicholson, director of the Sloan Program in Health Administration at Cornell University, believes Amazon is rolling out the generic program to boost Prime membership subscriptions, force customers to switch to Amazon for higher-margin brand-name drugs, and induce them to spend more on other products when they use the program.
Amazon’s new plan will mean consumers may have lower costs for some generic drugs, Nicholson said. But “it will do little, if anything, to reduce spending on drugs that do not face generic competition.”
RXPass is Amazon’s latest move to attract more healthcare spending from customers.
The company acquired online pharmacy PillPack in 2018, launched its own Amazon Pharmaci in 2020, and launched a virtual healthcare clinic last year. The company also agreed to buy One Medical, a primary care provider, for $3.9 billion last year. That deal is pending regulatory approval.
-— CNN’s Tammy Luby contributed to this article.