Dive Brief:
- Amazon has expanded its generic drug savings program to Prime members on Medicare, throwing open the program’s doors to a major population of medication users — if Amazon is able to get them to sign up.
- The subscription service, called RxPass, is now available to more than 50 million Medicare members in 46 states, according to a Tuesday release. RxPass is not yet available in California, Washington, Texas or Minnesota.
- RxPass is separate from insurance, but Amazon had to undertake additional regulatory and compliance measures in order for Medicare beneficiaries to be able to use the subscription service, a spokesperson said.
Dive Insight:
Amazon rolled out RxPass last year as the e-commerce giant looked to beef up its online pharmacy, called Amazon Pharmacy, to attract more Prime members to the service.
Amazon has struggled with uptake of Amazon Pharmacy since launching the business in 2020 in an effort to compete with drugstores like CVS and Walgreens amid the rising need for affordable medications.
During a fourth-quarter earnings call last year, Amazon CEO Andy Jassey said Amazon Pharmacy is “growing really quickly.” However, Amazon has yet to publicly share how many of Amazon’s roughly 200 million Prime members fill their medications on the site. And earlier this year, Amazon laid off a number of employees in the division, building on another round of job cuts in 2023.
RxPass subscribers pay $5 a month to fill as many prescriptions as needed from a list of about 60 generic medications, including delivery to their doorstep.
When the program launched, critics were uncertain as to whether RxPass would result in savings for consumers, given Amazon Pharmacy already offers inexpensive generics. Company executives said the offering is angled toward people with chronic diseases who need multiple medications and may not have robust healthcare coverage.
Medicare members tend to have robust coverage of generic medications through the program’s Part D benefit, which covers a wide range of drugs. However, most Medicare members have two or more chronic conditions — at least two-thirds of enrollees, according to government data.
Amazon touted RxPass’ potential savings in the release, noting a Medicare beneficiary that takes at least one medication through RxPass could save roughly $70 per year, with savings compounding the more medications are filled.
If all Medicare beneficiaries transferred their eligible prescriptions to RxPass, Medicare spending would fall by almost $2 billion, according to the company. An Amazon spokesperson said the company’s economists calculated that figure by analyzing government data to find the cost of equivalent medications through Medicare.
Depending on a Medicare beneficiary’s prescription drug plan (and how many medications they take), an RxPass subscription could make sense.
For example, diabetes drug metformin is covered by a little more than half of Part D plans, at a co-pay ranging from $0 to $7, according to GoodRx.
In comparison, on RxPass, metformin is included in the $5 monthly subscription, which also covers other drugs.
Amazon has also launched manufacturer coupons for select brand name medications to try and bolster its online pharmacy.
However, the e-commerce giant faces a number of competitors in the space, including legacy drugstores and newer companies looking to entice clients fed up with rising drug prices and opaque pharmaceutical supply chains.
Amazon is also focused on care delivery in its push into healthcare. Despite high-profile crash-and-burns of past offerings, including hybrid care provider Amazon Care and cost-lowering venture Haven, Amazon has built out a telehealth marketplace, called Amazon Clinic, and acquired medical chain One Medical in 2022.
Late last year, Amazon discounted the cost of a One Medical membership for Prime users.
