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Amazon opens online pharmacy with prescription delivery

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Now sold on Amazon: insulin, inhalers and other prescription drugs — all with two-day delivery for members of the ecommerce juggernaut's Prime shopping club.

Amazon's new online pharmacy, which opens Tuesday, lets users buy their medication and order refills on their phones or other devices and have it delivered to their doorsteps in a couple of days, just like a book or toilet paper. The move propels Amazon into a new business, potentially shaking up the pharmacy industry as it has done to everything from book sellers to toy stores and grocers. 

In another incentive for Prime members, Amazon is also teaming with Cigna's Evernorth subsidiary to offer its InsideRx card to provide discounts on brand-name prescription drugs when buying them without insurance at Amazon Pharmacy and some 50,000 participating drugstores. 

"We view the launch of Amazon Pharmacy as a continuation of Amazon's efforts to improve the value proposition of its Prime membership program, while capturing an increasing percentage of wallet share/household spend among existing members as Prime penetration continues to mature in the U.S," UBS analyst Eric Sheridan said in a research note.

Big chains like CVS and Walgreens rely on their pharmacies to bring them a steady flow of shoppers who stop by frequently to pick up their medications. But Amazon is also debuting the service amid the coronavirus pandemic, which is sparking consumer demand for online deliveries.

Shares of drugstore chains sank in pre-market trading, with CVS dropping about 9% and Walgreens slumping 12%. Amazon shares rose 2.6%.

Price comparisons

Amazon said it will offer commonly prescribed drugs starting Tuesday, including creams and pills, as well as medications that need to stay cold, like insulin. Shoppers have to set up a profile on Amazon's website and have doctors send prescriptions to the company.

Amazon said its customers will be able to research and compare medications, including branded and generic versions, while also checking the price without insurance, their insurance co-pay or the price through a new Prime prescription savings benefit. 

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Most insurance is accepted, Amazon said. But Prime members who don't have insurance can also buy generic or brand name drugs from Amazon for a discount, which the company said will be up to  80% off for generic medications and up to 40% off brand-name medications.

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

Amazon has eyed the health care industry for some time. Two years ago, it spent $750 million to buy online pharmacy PillPack, which organizes medication in packets by the time and day they need to be taken. Amazon said that PillPack will continue, focusing on shipping medication to people with chronic conditions.

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