Online pharmacies have still not captured a large share of the fragmented US pharma market, but Eli Lilly’s partnership with Amazon after a direct-sale initiative of its own may serve to shake up the establishment and show what a direct-to-consumer model can offer.
Eliminating the Middleman, or Not
Amazon Pharmacy was launched in 2020, introducing the same level of convenience and price transparency as in its other online product offerings. Consumers were suddenly able to use Amazon’s website or app to search for generic or branded medications and compare prices to find the lowest option.
Although a new entrant, Amazon was not fundamentally looking to disrupt the US pharmacy industry, but to join it by accepting insurance and staying within the established network of Pharmacy Benefit Managers (PBMs) – the middlemen employed by health insurance companies to negotiate prescription drug prices which control as much as 85 percent of the US market.
Although online, direct-to-consumer pharmacies have garnered users looking for convenience, price cuts and transparency, they still only represent USD 5.7 billion of the United States’ USD 300 billion retail pharmacy business. Eli Lilly has apparently taken note of their potential.
LillyDirect
Lilly launched its LillyDirect direct-to-consumer dispensing network earlier this year to enable patients to obtain their drugs, including the weight-loss blockbuster Zepbound, via third-party telehealth consultations where they can receive prescriptions and then have drugs delivered to them directly.
The decision to move into prescriptions and drug delivery arose from the huge demand for its weight-loss drug, which generated USD 175.8 million in sales in the last few weeks of 2023 after receiving regulatory approval in November.
Eli Lilly executive VP, Patrik Jonsson, said that the company does not see LillyDirect as a new retail distribution business either. “There’s been a lot of noise about drugs that are illicit or copies or compounded versions of Zepbound or other weight loss drugs and that’s concerning to us and I think it’s concerning to patients, so by going to LillyDirect, they have confidence in the supply,” he said.
For now, 14 medications are available via LillyDirect, but Lilly plans to introduce more drugs in the future.
Amazon Deal
Taking its direct-to-consumer push a step further, Eli Lilly, who also uses the platform TruePill to dispense its drugs, has partnered with Amazon, becoming the first Big Pharma to sign a deal with the retailer’s online pharmacy business.
For some, the deal could signal the start of a mentality change. “Healthcare in the US is extremely complicated with a lot of entrenched interests so Lilly partnering with Amazon is something of a breakthrough,” said Neil Saunders, managing director of GlobalData Retail. “Big Pharma endorsing Amazon as a distribution partner bolsters Amazon’s role in healthcare and could be the start of many more of these arrangements.”
