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Businesses Medicine United States

Amazon Shelves Plan To Sell Prescription Drugs (cnbc.com) 70

Major Blud writes: CNBC is reporting that Amazon Business, which considered selling pharmaceutical products last year, has put its plans to do so on hiatus. "The change in plan comes partly because Amazon has not been able to convince big hospitals to change their traditional purchasing process, which typically involves a number of middlemen and loyal relationships," reports CNBC. Amazon was able to gain licensing in 47 out of the 50 U.S. states, but has struggled to land contracts with large hospital networks. "The setback illustrates the challenges of getting into the medical supply and pharmaceutical space, even for a company as big as Amazon," reports CNBC. "Several health-care and pharmaceutical distribution companies saw their stock take a nosedive following recent reports of Amazon potentially getting into the space, but it will likely take some time before those concerns turn into real threats."
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Amazon Shelves Plan To Sell Prescription Drugs

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  • With the kind of markup they use, the price they pay is really a rounding error.
  • by kiviQr ( 3443687 ) on Tuesday April 17, 2018 @07:44PM (#56455515)
    Hospital is a middle man - they get markup on what they sell. They have no incentive to lower that cost. Your health insurance and you in the end pay for it!
    • Your health insurance and you in the end pay for it!

      The story mentions Amazon trying to sell drugs in 47 of the U.S. states. Not Europe.
      What is this strange thing called "health insurance" you're speaking about ?~~ :-D

      Hospital is a middle man - they get markup on what they sell. They have no incentive to lower that cost.

      On the other hand, the pharma companies and middle men upstream along the chain have an ultra-strong incentive to dramatically cut their prices and even sell at a loss some of their prescription drugs when making deals with big hospitals :
      - Hospital will be interested in making business with the middle man that gives them the biggest volume sal

  • Hospitals (for civilian non-veterans) in the USA have no incentive to be efficient. They can put whatever number they like on the invoice and they'll likely get paid.
    You people in the USA could get cheaper medical care with cheaper drugs if you would get your hospitals and doctors to find the cheapest supplier - but you seem to think that's some sort of evil socialism and you reject it. You have at least one illness: severe delusion. Maybe you have other illnesses too.

    • Re: (Score:3, Informative)

      Hospitals (for civilian non-veterans) in the USA have no incentive to be efficient. They can put whatever number they like on the invoice and they'll likely get paid.

      Having dealt with numerous hospital and doctor bills over the past couple decades, I can state with confidence that you're quite wrong.

      The hospitals and doctors may bill for a particular amount; but how much they actually receive depends on a rate negotiated with each insurance company. So when you look at a doctor's bill for example, you might see:


      2018-02-25 Brain Transplant $100000.00
      2018-02-27 Insurance Write-off -55000.00
      2018-02-27 Insurance Paid

      • Re: (Score:3, Informative)

        by bestweasel ( 773758 )

        And yet,
        States consider bringing prescription drugs from Canada to US as costs soar [theguardian.com]

        Sovaldi [a hepatitis C drug], is a good example of how prices can vary between countries. In the US, a course of Sovaldi lasts 12 weeks and costs $90,000 US retail.

        American insurers typically negotiate a discount of 41%, according to a Bloomberg News analysis. That puts the cost of the drug at $17,700 a month in the US.

        But in the United Kingdom, that drug costs $16,770 a month, and in Canada $14,493.

        For an even more dramatic

        • by tlhIngan ( 30335 )

          It looks like the drug companies charge what they like because the market in the US is fixed.

          No, it's because in Canada and Europe, the state buys from the drug companies. When an entire country is buying the drugs, they buy in bulk because they're buying for everyone in the country. This sheer buying power means they can demand good pricing for drugs. (In Canada, it's actually bought at the provincial level, but many provinces have joined forces to group buy the drugs, again, because it increases their lev

          • by pnutjam ( 523990 )

            No, it's because in Canada and Europe, the state buys from the drug companies. When an entire country is buying the drugs, they buy in bulk because they're buying for everyone in the country.

            Canada's entire population is less then the number of people served by Medicare. [cms.gov]
            And in reality, most of these health systems are actually multiple systems, I know Canada has one for each province, and the UK system is actually 5 systems.

      • by Memnos ( 937795 )

        And often if you're not on the approved list for all of the components of a hospital bill, your co-pay is based on the full freight of what's charged.

        And if you happen to be uninsured.. well, you're fucked.

      • How did you get hold of my medical records? ;-)
      • This. Medicare pioneered payment by DRG for CPT and it IS in the best interest of the hospital to be price efficient.
    • by MMC Monster ( 602931 ) on Tuesday April 17, 2018 @08:03PM (#56455579)

      I'm not sure if I believe this.

      As a physician employed by a fairly large hospital network, I know that my hospital pinches any penny they can.

      If they can get 1 cent less per acetaminophen tablet, they would sell their own mother for the opportunity.

      Not that they will pass that savings on to the consumer. But it will increase their margins so that they can afford to buy more stuff.

      So I can't believe Amazon.com is giving up on this.

      The only thing I can think is that the hospitals have multi-year contracts that need to run out and Amazon wasn't willing to wait.

    • Also, since Amazon is being targeted by President Trump right now, it's probably better that it waits until he leaves office. Starting a new business venture in pharmaceuticals when a branch of the government is out to get you is a very bad idea.

  • by Applehu Akbar ( 2968043 ) on Tuesday April 17, 2018 @08:03PM (#56455581)

    If the putative swamp-draiing team in Washington had put John Stossel in charge of the FDA and turned Amazon loose with the ability to buy medications in bulk on the world market and fill US prescriptions for less, Trump's second term would be assured. But apparently, nothing this rompingly popular is even under consideration by the 'populists'.

    If anything, the pond scum is getting deeper.

    • by tomhath ( 637240 )
      This isn't about selling to consumers like Walmart does. Amazon couldn't compete with the companies that have been selling in bulk to hospitals for many, many years.
      • This isn't about selling to consumers like Walmart does. Amazon couldn't compete with the companies that have been selling in bulk to hospitals for many, many years.

        Which is a shame. Having the doc E-sign a prescription and the meds automagically popping up in my Amazon cart and auto charged against my HSA with prime shipping would be several billion times better than schlepping to Walgreens and waiting while they force you to spend 20 minutes in their store in the hope you buy something.

  • by cascadingstylesheet ( 140919 ) on Tuesday April 17, 2018 @08:50PM (#56455757)
    More competition in this space would be good. It's disheartening that such a big player as Amazon can't break in.
    • by mjwx ( 966435 )

      More competition in this space would be good. It's disheartening that such a big player as Amazon can't break in.

      The problem isn't the US retail sector. Do you honestly think CVS, Walgreens, et al. wouldn't jump at the chance to sell medications for less. The problem is the US health care industry and laws that end up locking generics out of the market. The whole thing is designed to sell medications for the maximum price. Amazon have taken a look at the razor thin retail margins and said nothankyou.jpg.

  • Hospitals buy their drugs from Group Purchasing Organizations [wikipedia.org]. GPOs are a very efficient way to get medications and supplies (as Amazon just learned).
    • From your link: In 1986, Congress granted GPOs in healthcare "Safe Harbor" from federal anti-kickback statutes"

      I suspect that means they are dug in like ticks regardless of their efficiency

  • by Actually, I do RTFA ( 1058596 ) on Tuesday April 17, 2018 @09:29PM (#56455907)

    Amazon is pretty good at consumer delivery, but they're B2B service for repeated mass deliveries doesn't really exist yet. Nor is it in their area of competency. Those supply chains are already pretty well optimized, the ordering will be done via boring forms (for legal reasons), and there's no upselling/tracking of people's desires, and things are moved by the box, not the item. Also, big hospital chains already get bulk discounts.

    My guess is they really just weren't able to compete on price and service, not that "there are longstanding relationships that made hospitals decide to lose money.:

    • by Anonymous Coward

      All of that, plus the medical field will not accept a failure in delivery - they need the supply of drugs and material to be very, very, reliable. The consumer market doesn't put so much value on reliability.

    • You may be right, though I would not agree that a logistical service isn't in Amazon's core competency. Special handling might be an issue though. How is morphine, etc. delivered? Probably not in a truck with one delivery driver. I worked at a hospital some years ago, and I would absolutely believe 'longstanding relationships' would take precedence over considerations like cost. Many hospitals are 'not for profit' entities (not quite the same a non profit), and a cost or service advantage would not necessar
      • Amazon's B2C logistics are fine. They can get a random piece of crap sold and delivered. However, they aren't great at say quality assurance (look at the eclipse glasses) and have no demonstrated skill at maintaining the appropriate levels at thousands of retail locations (yet, they're developing them.)

        As for long-standing relationships, I'm not 100% sure I buy your explanation. While I believe that the MDs/RNs they promoted made bad IT decisions based on relationships, I'd hope their knowledge of medici

  • The change in plan comes partly because Amazon has not been able to convince big hospitals to change their traditional purchasing process, which typically involves a number of middlemen and loyal relationships

    How I read that is that there are a whole slew of weasels between my check to the doctor or hospital and the medication provider. I'd have to say that America already has a form of "socialized medicine". It's just not cost sharing between end-users; it's end-users supporting middleman. CORRECTION: Make that "middleman that give kickbacks and handjobs to the hospital purchasing agents but offer no value to the end user".

    So here's my suggestion: Every bill has to include an itemized list of where the mon

    • Unless Amazon is planning on producing drugs, aren't they just trying to be additional middlemen?

      • Yes. And for the medical industry, McKesson is already in that space, providing almost everything a hospital, ambulance, doctors office, etc. needs.
  • I just have BlueCross but everyone keeps saying that hospitals can just bill whatever they want and the insurance will pay it, but I've never seen that happen. I've had a few procedures and office visits this year and every time the insurance pays a lower rate then what the hospital tried to bill them. I'll see hospital billed rate, negotiated rate, and what the insurance paid. Even for visits before I met my deductible. In what the article is referring to, the hospitals are just stuck with companies like
  • For me, Costco is cheapest, but requires 20 minute drive each way, parking hassle, 10 minute lineups, 2-24 hour wait for prescription fill. Due to the high wait time, usually means two trips. One time when I was in a lot of pain and hurt to stand and Costco had a fill time of next day, the missus said something like "it's best to fill prescriptions a few days in advance so you're not waiting like this". If they weren't the cheapest, I would have had strong words several times I had to wait longer than ETA

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