Amazon is expanding its push into healthcare with a monthly $5 unlimited delivery pass on 60 common generic prescription medications to treat allergies, inflammation, high blood pressure and other conditions.
Amazon announced the new delivery service, RXPass, on Tuesday and it will launch immediately in most states except California, Texas, Minnesota and others with specific prescription delivery requirements. Customers enrolled in Medicare, Medicaid, or any other government health care program will not be able to enroll in the benefit.
The program is likely to save customers money on lower-priced generic drugs, but will not impact the prices of more expensive brand-name drugs, which account for the bulk of prescription drug spending in the United States, according to health analysts and economists. They also expect Amazon to lose money on the service, but see other benefits.
The $5-a-month delivery pass is an add-on to Amazon Prime, Amazon’s $139 annual program, and is available exclusively to Prime subscribers, regardless of insurance status.
Amazon has long offered a Prime prescription savings benefit to get discounts on generic and brand name drugs. The company said its new generic delivery program targets customers who take multiple prescriptions to manage chronic conditions and pay for their medications.
Some of the generic drugs included in the program include bupropion, cephalexin, doxycycline, estradiol, and sertaline.
Although generic drugs accounted for about 86% of all U.S. prescriptions in 2022 by volume, they only accounted for 20% of prescription drug spending, Evercore analyst Elizabeth Anderson said in a note to clients on Tuesday.
“The generic set of Amazon’s new program represents 32% of generic drugs in 2021, and is likely a loss leader for Amazon,” she said, calling it an “incremental pharmaceutical experience” for the company.
Amazon has focused its efforts on generics because it’s 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 that Amazon is introducing the generics program to increase Prime member subscriptions, compel customers to switch to Amazon for higher-margin brand name drugs. high and cause them to spend more on other products while using the program.
Amazon’s new plan will mean consumers could see lower costs for some generic drugs, Nicholson said. But “it won’t do much, if anything, to drive down spending on drugs that don’t face generic competition.”
RXPass is Amazon’s latest move to attract more healthcare spending from customers.
The company bought online pharmacy PillPack in 2018, launched its own Amazon pharmacy in 2020, and launched a virtual healthcare clinic last year. Last year, the company also agreed to buy One Medical, a primary care provider, for $3.9 billion. This agreement is pending regulatory approval.
—— CNN’s Tami Luhby contributed to this article.