Amazon is not a healthcare company
By Christiana Sciaudone
Investing.com – It’s one thing to fill prescriptions. It is another to provide health care.
Amazon.com (NASDAQ 🙂 announced its entry into the pharmacy business this week, news that prompted a drugstore sale from traditional players like CVS to newcomers like GoodRx. However, not everyone is convinced that the online monster will take over the business so completely. The co-CEO of the online start-up Bee health distinguishes between what a pharmacy is supposed to provide and what Amazon Pharmacy is likely to offer.
“What they’re known for is logistics and packages; it’s very different from what healthcare is, ”said Jessica Nouhavandi, also a co-founder and, perhaps more importantly, a pharmacist. “Healthcare requires a level of detail for people, not packages.”
It’s no surprise that Amazon wants to get into the pharmaceutical business. Americans spent $ 485 billion on drugs in 2018 and are expected to shell out up to $ 655 billion in 2023. That would represent a 35% growth, according to the Pharmaceutical Commerce news site. Sales of pharmaceuticals in the United States account for 40% of the global total, the largest by far, with China’s 11% share ranking second, according to Statista.
Why do Americans spend more than any other country on drugs? Unlike elsewhere, there are no price regulations and any drug that is proven to be safe can be placed on the market. American consumers also tend to use health insurance to obtain drugs, which depend on pharmacy benefit managers to manage prescription drug benefits and negotiate with the manufacturers on their behalf – an intermediary, if you will. It is clearly a complicated and expensive process, full of intermediaries along the way between you and your medications.
Nouhavandi, who started out as a pharmacist in a small town, along with her colleague Peter Wang, saw this process and the high costs associated with it up close.
“We realized that we are not telling patients the truth about the right price of drugs,” Nouhavandi said in a telephone interview this week. Insurance companies have forced them to only tell them the price of the copayment, not the cost if they bought outright, often a much cheaper option. Nouhavandi saw patients leave empty-handed when they could not afford to pay the co-payment.
Wang provides a vivid example on his LinkedIn page (NYSE 🙂 of a patient giving up a prescription for a standard cholesterol drug. Wang submitted the claim to the insurance company and told the patient that his co-payment for the generic drug was $ 90.19. What he couldn’t tell her was the real cost of those pills: $ 2.31.
“You don’t need insurance to buy generics, and you save more out of your pocket,” Nouhavandi said. Honeybee, founded in 2017, started taking off last year. The company supplies 6,000 generic drugs, and for the 50 most popular drugs, consumers can choose their manufacturer.
The company works directly with drug manufacturers, offering several low-cost generic options.
“Our mission is to provide transparent pricing and choice,” Nouhavandi said, “without so many hands in the pot raising the price.”
Honeybee, who is based in Los Angeles, also offers the option of speaking to a pharmacist, as it aims to recreate the in-person experience as much as possible.
The company has raised $ 10 million in funding and is targeting another increase in 2021. Revenue is expected to increase four times this year, although Nouhavandi declined to give more details. And although there are other competitors, Nouhavandi points out that she and her partners are pharmacists, not technicians from Silicon Valley.
“When it comes to pharmacy and healthcare, it’s about making sure you’re there to listen to concerns,” she said. People come first, as is the security of their information, and Honeybee doesn’t traffic in data.
It has not been an easy race, said Nouhavandi, who never imagined herself as the CEO of a venture-backed company.
“I didn’t offer this because I thought it would bring in money,” Nouhavandi said. “I did this because I had to. This is the oath I took and this is what is fair to people.”
While she hopes Amazon is doing the right thing for patients, she points out that she is doing the same as everyone else.
“The news of this launch, as big as it is and as powerful as it is, has been frankly disappointing,” Nouhavandi said. “They don’t really innovate for patients or offer more price transparency. This is what we aim to do.