FOX 61 invited Goodroot CEO Mike Waterbury to join their morning broadcast as a pharmacy business expert providing context on the recent launch of Amazon Pharmacy.
As a 25-year veteran of the healthcare industry, Mike was able to help anchor Angelo Bavaro put the Amazon announcement in perspective. Some key takeaways from their conversation:
The main value that Amazon Pharmacy will likely offer consumers is convenience. However, price and accessibility are generally more important issues for pharmacy consumers
- Amazon already owns a mail-order pharmacy business and partnered with Cigna to launch Amazon Pharmacy, so while the announcement is noteworthy, it’s not especially disruptive
- Goodroot is leveraging talent in Connecticut’s robust healthcare industry to solve specific problems in the healthcare industry, which will combine to have a major impact
Below is a transcript of the interview edited slightly for flow.
ANGELO BAVARO: Good morning. So for people who may not know how any of this works, can you just quickly explain how these online pharmacies work, what can people expect, how does this process work?
MIKE WATERBURY: Amazon has a mail-order pharmacy. I mean, mail-order pharmacies exist today. You can order through the mail today. Amazon has a solution where they pre-pack your medications and send them to you.
People shop for many retail items through Amazon for convenience. But the key with healthcare is really access and price.
If you have insurance, “Is Amazon part of my insurance and what price am I paying” is key versus just the convenience of it showing up. I mean, that’s great–compliance is critical for drugs and your health–but really most people are focused when it comes to pharmaceuticals, which can be expensive, on “Can I get it through my insurance if I have insurance and what’s the price?”
ANGELO BAVARO: And you talk about those two factors right there. What does the price look like on this site?
MIKE WATERBURY: As we know from the announcement, Amazon partnered with Cigna, which owns Express Scripts, which is a pharmacy benefit management company. They did that to get better pricing for pharmaceuticals for the people who use Amazon. So the pricing is effective, but it’s similar to what you would get through your own insurance.
The real question, I think, Angelo, is, “If I don’t have insurance, or when I have insurance and maybe there’s a price better than my insurance, does Amazon have a better price then?”
And I think there’s some debate about that right now. I mean, I think they’re using Cigna’s size and scale to get effective pricing, but I think it’s yet to be seen. Price competition in healthcare is a really good thing for consumers, so we’re happy that Amazon is here talking about what prices look like. But it should be a similar price when you have insurance. And when you don’t have insurance or you’re shopping around for a better price, you have to be determined.
I think companies like GoodRx have many more access points in a retail setting. Remember, only 5 percent of scripts are filled in a mail setting today. So when you walk into a pharmacy, you really want to be accessing a broad network of pharmacies.
The challenge Amazon has is they compete with those pharmacies, right? They compete with CVS as a retailer or Walmart, and so they’ll have those challenges. But I think talking about price and increasing access is a good thing for consumers.
ANGELO BAVARO: And you just mentioned this, but I was watching an interview with GoodRx’s CEO and he mentioned the fact that a lot of this is not done through the mail. Do you think this will get a lot more people to switch potentially? What do you see happening on that front?
MIKE WATERBURY: I think it’s interesting, because I think retail pharmacies if anythingm are becoming more a landscape of local healthcare, right? We’re talking about vaccines at our local pharmacies.
And so mail-order pharmacies have been around a long time and they have a 5 percent penetration rate today. Amazon has access to a lot of people. They have a good service model. So it probably will have some impact. But I think traditionally in healthcare, things don’t change very quickly, so I think they’ll probably not have a significant increase at the mail order. And if anything, I think retail is here to stay. I mean, through with the pandemic and vaccinations, I think we’re seeing retail pharmacies as an alternative to our healthcare when healthcare really needs to be local.
ANGELO BAVARO: And what’s been the reaction from the traditional retail-pharmacy industry? Is this a welcomed addition, would you say?
MIKE WATERBURY: No, I think they see it as a threat. I mean, you saw Wall Street react pretty aggressively when Amazon showed up. But from where we stand at Goodroot, what we’re trying to do is reinvent healthcare one system at a time. And ultimately, we see this as just not really a disruption. It’s just trying to gain market share and make money in healthcare.
And so we were hoping that companies like Amazon and Google and others will come in and disrupt the system and use their leverage to create better pricing and better access. We see this as a lot of the same, because they had to partner with one of the major players to get into the system.
ANGELO BAVARO: And just to sum it up here, what’s your vision for the future of the healthcare industry here in Connecticut? Do you think this will play a factor in that?
MIKE WATERBURY: I think it will. I mean, our vision ultimately is there’s a lot of talent here in healthcare – I mean, in Connecticut. Hartford is the center of the insurance world. And so we created a model at Goodroot where if you bring your ideas that disrupt and increase access and improve costs for patients, you bring them to Goodroot, we’ll help you set those companies up and work to disrupt the system so that we can bring better care ultimately to patients of Connecticut and all over the country.