(CNN) Amazon is expanding its push into healthcare with a $5 monthly unlimited delivery pass on 60 common generic prescription drugs that treat allergies, inflammation, high blood pressure and other conditions.
Amazon announced the new delivery service, RXPass, on Tuesday and it will launch immediately in most states except California, Texas, Minnesota and others with specific prescription delivery requirements. Customers who are enrolled in Medicare, Medicaid, or any other government health care program will not be able to enroll in the benefit.
The program is likely to save customers money on low-cost generic drugs, but won’t hurt prices for the most expensive brand-name drugs, which account for the lion’s share of US prescription drug spending, analysts and economists say of medical care. They also expect Amazon to lose money on the service, but see other benefits.
The $5/month delivery pass is an add-on to Amazon Prime, Amazon’s $139 annual program, and is exclusively available to Prime subscribers, regardless of insurance status.
Amazon has long offered a Prime prescription savings benefit for discounts on brand name and generic drugs. The company said its new generic drug delivery program is aimed at customers who take multiple prescriptions to manage chronic conditions and pay out-of-pocket costs for their drugs.
Some of the generic drugs included in the program include bupropion, cephalexin, doxycycline, estradiol, and sertaline.
Although generic drugs accounted for about 86% of all US prescriptions in 2022 by volume, they accounted for just 20% of prescription drug spending, Evercore analyst Elizabeth Anderson said Tuesday in a note to clients.
“The pool of generics in Amazon’s new program represents 32% of generic drugs in 2021, and is likely to be a loss leader for Amazon,” he said, calling it an “incremental pharmacy experiment” for the company.
Amazon has focused its efforts on generics because it’s harder to compete with health insurers and other companies on brand-name and specialty drugs, he said.
Sean Nicholson, director of the Sloan Program in Health Administration at Cornell University, believes that Amazon is introducing the generic program to boost Prime membership subscriptions, force customers to switch to Amazon for higher-margin brand-name drugs. and have them spend more on other products when they use the program.
Amazon’s new plan will mean consumers may see lower costs for some generic drugs, Nicholson said. But “it won’t do much, if anything, to reduce spending on drugs that don’t face generic competition.”
RXPass is Amazon’s latest move to attract more healthcare spending from customers.
The company bought online pharmacy PillPack in 2018, launched its own Amazon Pharmacy in 2020, and launched a virtual healthcare clinic last year. Last year, the company also agreed to buy One Medical, a primary care provider, for $3.9 billion. That deal is awaiting regulatory approval.