On Tuesday, Amazon (NASDAQ:AMZN) announced that customers in 45 states will be able to fill their prescriptions through Amazon Pharmacy beginning this week. Delivery to the remaining five states -- Hawaii, Illinois, Kentucky, Louisiana, and Minnesota -- should be available over time.

The company's decision to launch Amazon Pharmacy builds upon its $1 billion acquisition of PillPack in 2018. A mail-order pharmacy, PillPack specializes in delivering pre-packaged daily medication packets to patients with multiple prescriptions.

A miniature shopping cart filled with prescription drugs sits on atop a laptop displaying an online pharmacy

Image source: Getty Images.

The new Amazon Pharmacy will offer perks to Amazon Prime members, including faster delivery. Nonmembers can receive prescriptions within five days for free, but Prime members get free two-day delivery, plus savings of up to 80% at checkout. If prescriptions are being transferred from another healthcare company, such as Walgreens or CVS Health, a customer's first delivery could take longer than two days. 

Amazon Pharmacy will accept most health insurance plans, or patients can pay out of pocket if Amazon's price is lower than their plan's co-pay. Patients can use their health savings accounts or flexible spending accounts to pay, too.

According to the company, most generic and brand medications will be available through Amazon Pharmacy, including insulin and birth control. If patients have questions about their medications, they'll be able to ask a pharmacist 24 hours a day, seven days a week.

Amazon Pharmacy could eventually contribute significantly to revenue. According to the Centers for Medicare & Medicaid Services, prescription drug spending increased 3.2% in 2019, and in 2020 is expected to climb 3.7%. Spending is forecast to accelerate to 5.4% per year between 2021 and 2023 because of growing demand and higher prices.

Overall, Americans spend over $335 billion annually on prescription medications, a significant proportion through the largest retail pharmacy chains.

 

 
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