News & Trends - Pharmaceuticals

Amazon Australia to disrupt community pharmacy model

Health Industry Hub | January 20, 2020 |
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The Australian arm of retail giant Amazon has filed a trademark for the term “Amazon Pharmacy” suggesting a potential entry to the highly regulated pharmaceuticals industry.

Submitted to trademark authority IP Australia in January 2020 the submission covers a number of goods and services classes in the pharmacy space, including medical apparatuses, medication dispensers, online pharmacy retailing and the distribution of prescription medication.

The trademark includes a pharmacy packaging service that aligns, sorts and packages a patient’s medications by date and time into individual packets.

This is similar to Amazon’s existing pharmacy retail service in the US initiated last year through a $1.35 billion acquisition of online pharmacy startup PillPack.

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PillPack offers pre-sorted medication packages containing individual daily doses, primarily aimed at users who take numerous drugs. The company co-ordinates with doctors and insurers to manage prescriptions, with licensed pharmacists overseeing the process.

A slice of the $38 billion local pharmaceutical sector could be hard going for a new entrant such as Amazon, with Australia having strict rules on who can own pharmacies and how prescriptions must be processed. Pharmacies in Australia must be owned by a pharmacist, and legislation exists which dictates how close a new store can be to an existing pharmacy.

It’s unlikely Amazon would be able to significantly undercut medicine prices, with the government’s Pharmaceutical Benefits Scheme (PBS) limiting the amount Australians pay for most medications. Pharmacists are only able to discount the price by $1, leaving little room for Amazon to offer cheaper rates on prescription medicines as it does for other consumer goods.

To have medication fulfilled online, patients must currently mail their paper prescriptions to the pharmacy first, however, the Department of Health is currently investigating electronic prescription methods providing the legislative framework for prescribers and their patients to have the option to use an electronic prescription as an alternative to a paper-based prescription. When e-prescribing comes in and online pharmacy becomes part of the landscape, up to 20% of the community pharmacy marketshare may become eroded.

The Pharmacy Guild of Australia has brushed off Amazon’s potential entrance into the market, saying Australians prefer to have their prescriptions filled face to face.

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“Australia’s pharmacy network model and regulatory requirements around the supply of prescription medicines has meant most people continue to source their medicines from their local pharmacy where they can get face-to-face advice and assistance,” a Guild spokesperson said.

“Most Australians live within 2.5 km of a local pharmacy, where they can access subsidised medicines immediately – without waiting for a delivery from overseas.”

While Amazon Pharmacy may not happen immediately, there is a real potential for Amazon Australia to disrupt the Australian community pharmacy business in the near future.

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