Disruptive Innovation in Pharmacy Lessons from the Amazon Frontier

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Disruptive Innovation in Pharmacy Lessons from the Amazon Frontier Insights | Competition and Market Forces Disruptive Innovation in Pharmacy Lessons from the Amazon Frontier Fadia Tohme Shaya, PhD, MPH; Natalie D. Eddington, PhD Amazon Pharmacy is officially here. In November 2019, Amazon officially rebranded the virtual Author affiliations and article information are pharmacy startup PillPack as part of Amazon Pharmacy.1 It created a full-service online pharmacy, listed at the end of this article. licensed to ship prescriptions in all 50 states in simple-to-use, prepackaged doses and proposing to provide “the best possible customer experience in the US for people who take multiple daily prescriptions.”2 How did a commerce platform succeed in positioning itself as a leading pharmacy? This development presents an opportunity for education and practice hubs to lead innovation and reshape health policy. Amazon’s PillPack was poised to transform a market that was ripe for disruption through business model innovation by automating access to medications and engaging a less skilled workforce to deliver a lower-cost solution in an affordable, convenient, and accessible way. It created a value network by offering a stakeholder network platform, including drug manufacturers, insurers, and providers, that responds profitably to patients’ needs. Pharmacies Aligning for Innovation, Maintaining a Disruptive Scope This disruption has already accelerated consolidations, mergers, and other alliances among pharmacy chains. Walgreens has completed its acquisition of Rite Aid stores, for example, albeit with many locations closing and creating pharmacy deserts. Brick-and-mortar pharmacies that remain are trying to leverage their strong position in their communities to provide higher value to patients. Some changes that enhance customer experience in a patient-centered approach include close and personalized monitoring for medication gaps, side effects, and drug-drug interactions, as well as the provision of unit-dose packaging. More importantly, pharmacies need to surpass the convenience that Amazon Pharmacy offers by bringing in more efficiencies in communications with prescribers and in prescription refills and by expanding their own drug delivery programs.3 They are increasingly providing medication therapy management services,4 monitoring and managing refills directly with the patient’s physician, and offering 24/7 support for all services by phone, email, text, or live chat. New models may have to involve redesigning the physical layout of the pharmacy and addressing the issue of pharmacy deserts. While pharmacies have been mostly reluctant to transfer prescriptions to Amazon PillPack, some have proactively reached out to their existing patients and identified new market segments— such as overserved patients (ie, those who do not need medication maintenance, counseling, or follow-up; those who need an occasional prescription for a nonchronic condition; or those on low-risk drug regimens [the low-end market]) and those likely to be noncompliant with drug regimens—and launched personalized services to them. Finally, traditional pharmacies have the comparative advantage of their physical presence and real estate in various neighborhoods, with deep roots in the community. They are thus ideally positioned to provide much-needed, culturally competent services, address health disparities, and provide timely services. Amazon has processes for quick fulfillment, returns, and refunds, but its Open Access. This is an open access article distributed under the terms of the CC-BY License. JAMA Health Forum. 2020;1(1):e200038. doi:10.1001/jamahealthforum.2020.0038 (Reprinted) January 29, 2020 1/3 Downloaded From: https://jamanetwork.com/ on 09/26/2021 JAMA Health Forum | Insights online nature makes the process more sensitive given that timeliness, accuracy, and precision are key for medications, and returns and refunds are complicated. Building Stakeholder Value Networks Pharmacies may have to rely on new metrics and profit formulas and expand their large networks with pharmacy benefit managers (PBMs), Medicare Part D plans, and clinics5 and keep updating software systems and tools. While they should not try to replicate or compete with Amazon’s resources to help deploy new business (eg, 1-click shopping, personalized recommendations, Amazon Web Services, Fire tablets, and Amazon Echo), they could leverage their local presence in the community to provide customized and culturally appropriate services. The disruption extends to insurers and PBMs. Given that Amazon is looking into bypassing the PBMs by negotiating directly with the insurance companies, costs to Amazon customers may decrease. PBMs are reinventing themselves, no longer focusing only on price cutting. They are adding value to their services by providing data analytics, for example, and positioning themselves as health improvement organizations. The pharmacy chains and other retail pharmacies that still use PBMs are possibly becoming less competitive on price. However, they can be more competitive on value and utility to patients. They can create value by partnering with providers and with community, faith-based, and employer groups to build value networks and economies of scope. For example, they can help employers reduce costs by providing medication therapy management to high-risk employee groups. Pharmacies are also moving upmarket by providing increasingly more convenience to patients with medical devices, insurance management, pharmacy education, workforce training, and data analytics. They should likely keep targeting nonconsumption and adding services, such as more health screenings or medication reconciliation services, that no other providers are as qualified or have the bandwidth for. Pharmacist and physician services would complement each other, with pharmacists providing continuity in medication management. They could thus quickly increase their patient base and proactively expand into complex and higher-margin specialty pharmacy services or institutional pharmacy, for example in behavioral health services, rehabilitation facilities, and substance abuse treatment centers. Regulations on insurance and pharmacy services reimbursement will likely react to this disruption, and there will be opportunities to leverage the existing infrastructure of pharmacies and the cognitive role, as opposed to only the dispensing role, of pharmacists to include treatment planning, medication reconciliation, and therapy management among the services licensed pharmacists can provide. Expanding the pharmacy counter or, even better, opening the counter to the community would be ideal. Pharmacist Training and Workforce Development The disruption caused by Amazon Pharmacy also has repercussions for pharmacist education and workforce development.6 Amazon Pharmacy has a big stake in pharmacy workforce development and has to engage with the source: colleges, boards of pharmacy, and professional associations. Pharmacy school curricula will likely expand along the value chain with greater didactic and experiential education in information technology as well as patient-centered care. Market expansion is also increasing the need for less-skilled workers and for more programs offering certifications and credentials,7 in addition to the primary PharmD degree programs for clinical pharmacists. Unlike regular e-commerce, the sale of prescription drugs is a heavily regulated business, requiring continuous attention to federal, state, and local policy, so it is important to nurture key partnerships with drug regulators and health policy experts to ensure transparency. JAMA Health Forum. 2020;1(1):e200038. doi:10.1001/jamahealthforum.2020.0038 (Reprinted) January 29, 2020 2/3 Downloaded From: https://jamanetwork.com/ on 09/26/2021 JAMA Health Forum | Insights We expect Amazon Pharmacy will complement and not replace brick-and-mortar pharmacies. With this equilibrium, a successful customer-focused approach will translate into a meaningful pharmacy-focused patient experience that is scaled to a wider national market yet anchored in communities, including strategic alliances with educational programs and health policy hubs to shape the future pharmacy workforce. ARTICLE INFORMATION Open Access: This is an open access article distributed under the terms of the CC-BY License. Corresponding Author: Fadia Tohme Shaya, PhD, MPH, University of Maryland School of Pharmacy, 220 Arch Street, 12th Floor, 01-204, Baltimore, MD 21201 ([email protected]). Author Affiliations: Center on Drugs and Public Policy, University of Maryland School of Pharmacy, Baltimore, Maryland (Shaya); Behavioral Health Research Program, University of Maryland, Baltimore (Shaya); Institute for Clinical and Translational Research, University of Maryland, Baltimore (Shaya); University of Maryland School of Pharmacy, Baltimore, Maryland (Eddington); University Regional Partnerships, University of Maryland, Baltimore (Eddington). Conflict of Interest Disclosures: None reported. REFERENCES 1. Garcia A. Amazon rolls out 'Amazon Pharmacy' branding to PillPack. CNN Business. November 15, 2019. https:// www.cnn.com/2019/11/15/tech/amazon-pharmacy-pillpack/index.html. Accessed December 2019. 2. PillPack website. https://www.pillpack.com. Accessed December 2019. 3. Steed L, Sohanpal R, Todd A, et al. Community pharmacy interventions for health promotion: effects on professional practice and health outcomes. Cochrane Database Syst Rev. 2019;12(12):CD011207. doi:10.1002/ 14651858.CD011207.pub2 4. Shaya FT, Chirikov VV,
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