Feb 6, 2023 - Health

Why Amazon's RxPass is a bigger deal that you think

Photo: Darren Staples/Bloomberg via Getty Images

Amazon's new RxPass prescription service further increases the downward pressure on the cost of generic drugs, the Wall Street Journal reports.

Driving the news: Last month, Amazon announced the new benefit to its Prime subscription service, allowing members access to unlimited prescriptions for generics for more than 80 conditions for $5 a month.

Between the lines: Combined with its purchase of Amazon's One Medical last year, "it makes clear that the tech juggernaut intends to build a serious healthcare vertical," per the WSJ's David Wainer.

  • "Amazon has proven time and again it is willing to bleed cash on various ventures as a way to build overall engagement with Prime," he wrote.

It notably joins Mark Cuban's Cost Plus Drug Co., which is using a different strategy to drive down prices by offering a transparent pricing scheme.

The intrigue: While the response to RxPass was underwhelming, it was a "tricky, good move," according to Betsy Stanley, senior director at business strategy consultancy firm for Pinkston Strategy.

  • Amazon further expands its share of the consumer wallet and gets new data on their purchases, Stanley said. It could also set up direct competition with specialty brands like Hims and Ro by selling generic Viagra, she said.
  • "I think RxPass is more of a stepping stone into normalizing Amazon's brand into health care," Stanley said. "Compared to previous efforts Amazon made in health care, this is getting a reaction of 'This just makes sense. This doesn't feel like a big deal' ... We're all normalizing health care and Amazon."
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