Amazon Australia’s Bid for Online Pharmaceuticals

The trademark was filed on Thursday, 9th January and covered a series of categories, including ‘pharmaceuticals’; ‘surgical, medical, dental and veterinary apparatus and instruments’; and ‘retail store services and online retail store services, namely, pharmacy, retail drug store and general merchandise store services’.

Moreover, this trademark covers ‘pharmacy packaging service that aligns, sorts and packages a patient’s medications by date and time into individual packets’.

In the US, Amazon has previously entered the pharmaceutical category with its subsidiary, PillPack. Acquired by Amazon in 2019 for USD753 million, the service provides ‘full-service online pharmacy that [packages medication] and delivers to [the customer’s] door every month’.

When Amazon entered Australian waters, it was thought to be the ultimate gamechanger. The reality proved that to be incorrect. Due to its slow start in 2017, it had a loss of $5.3 million (after-tax) on $260 million in revenue. However, in 2019, Amazon turned the tables and launched its home and gardening category, which rocked the likes of Bunnings and other comparable online retailers. So, will this happen again with the pharmaceutical sector?

The Legalities

There are a few big names in the pharmaceutical sector that dominates throughout Australia, including Chemist Warehouse, Priceline Pharmacy and Amcal. Breaking into the industry isn’t as easy as one may think, so Amazon Australia will face difficulty as it navigates through a highly regulated system.

In Australia, pharmacies must be owned by pharmacists, and there is a very high chance that the prices that Amazon wishes to deliver will not be viable in the future,m due to the Pharmaceutical Benefits Scheme. If Amazon Australia is set to introduce a pharmacy into its group, it must refer and follow the Consumer Price Index (CPI). From 2016, the PBS states that ‘pharmacists have the option to discount the patient co-payment by up to $1.00′. This leaves very little room for Amazon to compete against legacy companies who already reduce prices based on the regulatory prices.

According to the Department of Health, if a customer wishes to order online, they have to mail their physical prescriptions to the pharmacist first to receive their medication. There’s another issue that Amazon Australia will have to face with this new concept, and that’s the fact that Australian customers prefer to collect prescriptions face to face. However, as many Australians live far from a pharmacy, online orders may just be the answer that Aussies have been searching for. It’s just the case of sorting out the legalities.

What do Pharmacists Think?

In the US, PillPack was received somewhat negatively by pharmacists and medical companies. PillpAck, according to Pharmacy Times, sends ‘unsolicited phone calls to their patients as a way of requesting transfers of prescriptions’.

“One of the patients, according to the pharmacist that received the call, actually thought it was us calling them. So, they were confused and were calling to follow-up [with us], because we’re their pharmacy and we didn’t know,” said Dana Gordon, PharmD in the US. “I imagine that [PillPack is] big enough that they can basically solicit everyone, but my concern was more of a privacy standpoint. How did they know where [the patients] were getting their medicine? I could understand third parties like Express Scripts doing it, because [a patient may be] in their database and they see a prescription being filled, but the Amazon part was alarming. How did they know? Unless the information came from another source.”

Ideally, this is an interesting concept for Amazon Australia and Australian online retail in general. If there is space for an online pharmacy with competitive prices, it could change the way Aussie shop online forever.

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