Amazon Pharmacy: How the New Online Service Works

Amazon Prime members can receive discounts and free two-day delivery for prescription medications

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Consumers are getting a new—and possibly lower-cost—option for ordering their prescription drugs.

Amazon just launched a new online store, Amazon Pharmacy, that will offer U.S. customers another way to order prescriptions and have them delivered to their homes.

For Amazon Prime members, these orders will receive free two-day delivery. Members paying without insurance can get up to 80 percent savings off generic medications and up to 40 percent off brand-name drugs. If you do use your insurance, the price may not be that much different from your current pharmacy.

Prime members will also receive a prescription savings card to use when purchasing medications at eligible local pharmacies. (When ordering on Amazon's website, the savings are applied automatically.)

More on Prescription Costs

Amazon’s pharmacy launch follows earlier moves into the healthcare business. In 2018, for example, Amazon acquired PillPack, which packages medications in premade doses primarily for those with chronic conditions who take multiple pills daily. That service will be included as part of Amazon Pharmacy.

(The pharmacy will not provide Schedule II controlled medications, which includes most opioids.)

Customers will have access to help through an online self-service option and by phone, with pharmacists available for questions 24/7, according to Amazon.

“We designed Amazon Pharmacy to put customers first,” said TJ Parker, vice president of Amazon Pharmacy, in a statement. “We work hard behind the scenes . . . so anyone who needs a prescription can understand their options, place their order for the lowest available price, and have their medication delivered quickly."

Increased Competition

Amazon’s move offers stiff competition for established retail pharmacies, analysts say.

"The Amazon Pharmacy overall is equipped with many of the same benefits as a walk-in or drive-thru pharmacy, albeit without the in-person experience an individual would get by walking into a CVS or Walgreens pharmacy," said Ralph Giacobbe, head of Americas Healthcare Sector, Citi Research, in an emailed statement.

Still, Amazon’s launch is not likely to be a “fatal blow” to the retail pharmacy industry, according to Adam Fein, Ph.D., a drug-pricing expert at the Drug Channels Institute, a research firm.

“For now, Amazon is choosing to join the drug channel, not fundamentally change it,” said Fein in an email, noting that Amazon is adopting a savings card model similar to what's offered by GoodRx, a healthcare company that provides prescription discounts.

Using Amazon Pharmacy

For consumers who use Amazon Prime, the new pharmacy option is worth checking out. But whether it offers a better deal than your current pharmacy will depend on your insurance coverage and healthcare needs.

Do these three things to help you decide:

Check your healthcare plan to make sure it will work with Amazon Pharmacy. Amazon says it works with most plans—but you need to go through the sign-up process to find out. Or call your plan's 800 number and ask.

Compare the costs. You will also need to check whether your plan may offer lower drug costs if you work with a different pharmacy, says Karyn Schwartz, senior fellow at Kaiser Family Foundation, a nonprofit healthcare research group. Some plans may offer deals for mail-ordering through particular pharmacies, for example.

Calculate spending. For those with high deductibles, examine your healthcare spending to see if the savings card will benefit you. "You may save money by paying without insurance, if you haven't met your deductible, but the costs won't count toward it," says Schwartz. Be sure to find out if your pharmacy will accept that card.

For more tips on managing your drug costs, see our coverage of prescription and over-the-counter drugs.

Photo of CR Money editor, Penny Wang.

Penelope Wang

I cover everything from retirement planning to taxes to college saving. My goal is to help people improve their finances, so they have less stress and more freedom. What I enjoy: walks through the city, time with family, and reading mysteries, though I rarely guess who did it. Follow me on Twitter (@PennyWriter).