Is Amazon Primed to Disrupt Specialty Pharmacy?

WHAT IF YOU AWOKE TO THIS HEADLINE? “Amazon Acquires Specialty Pharmacy”

Graduate pharmacy class: circa 2030.

“Good morning, class! Today, we will be doing a case study on specialty pharmacies, starting with their early success introducing a disruptive new service model to accommodate the influx of biologics in the 1990s and early 2000s and then moving on to how, like Kodak, Blockbuster Video, and countless others, they didn’t recognize the implications of emerging digital technologies and were made obsolete by 2025. Let’s get started. Alexa, please project case study 124 onto the center screen.” 

This scenario is real, and other industries offer many examples of the dire consequences of digital disruption. With shrinking margins, a dated focus on incremental platform improvements, the increasing desire of consumers for digital self-service, and heavy strategic reliance on human resource—dependent call centers, specialty pharmacies are facing significant and likely fatal disruptions as they enter the crosshairs of technology.

Clinging to a strategy that dictates that high-touch models are the only way to remain viable, most specialty pharmacies have no strategic clarity to support the critical move to digital and mobile health (mHealth) engagement.

A quick survey of the current specialty pharmacy digital landscape indicates that most websites are still glorified business cards and mHealth is the elephant in the room, getting little more than lip service. With a glaring lack of digital engagement options for consumers, specialty pharmacies are still spending significant organizational energy utilizing unscalable call center resources to chase down patients for onboarding, adherence interventions, refills, etc.

Enter Amazon, the most technologically advanced, consumer-centric digital retail distribution organization in the world. With Amazon, you have an entity in prime (pun intended) position to disrupt the specialty and/or retail pharmacy industry.

How difficult would it be for Amazon to buy a small specialty pharmacy licensed in all 50 states and leverage their advanced distribution system and consumer relationship platforms to create an unprecedented ability to deliver specialty pharmacy services and therapies at scale?

Their Alexa, Echo, and Dot conversational user interfaces, synchronized with their ubiquitous Kindle smart devices, could very effectively engage patients, answer questions 24/7, enable the collection of real-time clinical insights, and drive adherence/refills with real-time interventions.

With traditional call center costs dramatically reduced by Amazon’s ability to deliver a pervasive front-end engagement channel for millions of patient relationships by using technology, the ability to compete for payer contracts and deliver more lucrative pharma services at a lower cost would be unprecedented.

By disrupting the current limited-scale high-touch model with an infinitely scalable smart-touch technology-dependent model, Amazon could leverage remote-monitoring devices, artificial intelligence-powered conversational user interfaces, behavior-based real-time virtual coaching, and a low-cost optimized call center to deliver personalized and holistic daily engagement at any point during the patient’s clinical journey at an extremely low price point.

The smart touch approach would trigger a transformative move from traditional call centers that support adherence to a monthly therapy to an unlimited digital engagement platform that will uncover unprecedented real-time data insights and enable optimized adherence to the right therapy.

As if all of this wasn’t enough, factor in Amazon’s dominant cloud services, which could enable the ability to store and analyze large amounts of real-world patient-generated health data. These data could be collected in such a manner that they can add predictive analytics to the equation. One quickly arrives at the conclusion that these factors represent a dramatic, clear and present danger to specialty pharmacy that is tragically absent from the industry’s collective radar screen.

How can something like this happen? The latest policy developments confirm this theory. As consumers continue to interweave most aspects of their lives through digital dependence on smartphones, tablets, and watches, the law is not clear on who regulates this space. Currently, mHealth is overseen by the FDA, Federal Trade Commission, and Federal Communications Commission, with no agency taking a defined regulatory lead as of yet.

More importantly, 2017 marked a significant decrease in the protection of consumer rights with regard to online privacy. In October 2016, the FCC approved new rules requiring Internet service providers to get consumer permission before collecting and sharing their data.

The rules were seen as a layer of protection against invasive data mining as consumers become more connected. Under the prior rules, broadband providers had to notify customers about the information these providers collected and shared, while also having to receive opt-in consent from consumers before collecting sensitive data, such as geolocation, app usage, and Web browsing history.

Opponents of the rules argued that they were underinclusive because search engines and social media sites, such as Facebook and Google, were free to continue collecting user data without obtaining permission or having to worry about regulatory oversight.

All of this changed in April 2017 with the enactment of SJ Res 34. Sponsored by US Sen Jeff Flake (R-AZ), this law reverses the aforementioned protections so that broadband providers can resume sharing a customer’s browsing history with advertisers. Although S 878, a bill to establish privacy protections for customers of broadband Internet access service and other telecommunications services sponsored by US Sen Ed Markey (D-MA), proposes to direct the FCC to promulgate certain customer privacy regulations against broadband providers, questions still remain as to what happens to hypothetical medical inquires on social media?

In Winston Smith v Facebook, a federal district court judge in northern California dismissed a class action lawsuit accusing Facebook of taking advantage of user information when users visited major cancer organization websites. In the March 2016 lawsuit, the plaintiffs alleged that Facebook, the American Cancer Society, the American Society of Clinical Oncology, and 5 other cancer organizations collected private information from the medical organizations’ websites when users clicked on a Facebook “like” or “share” button embedded on the sites.

The suit stated that Facebook can identify individual users, track their visits to the defendants’ websites, and use the data to target users with tailored advertisements, which are in violation of the federal Wiretap Act, the California Invasion of Privacy Act, and other statutes.

The court ruled that since the medical organizations named in the lawsuit are outside of California, the court lacked jurisdiction over the case. While this setback may likely be appealed, it points to a larger problem that exists: what can stop a large IT firm, such as Facebook or Amazon, from leveraging its resources to significantly enter the specialty pharmacy space? The answer is, not much. Knowing this, it is important to realize that specialty pharmacy is not doomed.

It is important for the industry to understand that the Amazon hypothetical situation in the introduction to this article represents an opportunity that specialty can exploit with an open mind toward technology and strategic consulting. Telemedicine and mobile health are primed for explosive growth that specialty can harness to enhance patient care and lower costs. Although the regulatory environment for these issues is slow growing, it is still changing and states are starting to engage in innovative conversations on how to improve care for patients in the 21st century.

The lone certainty is that the trend of a more connected patient shows no signs of slowing down. URAC’s recently published Industry Insight Report for specialty pharmacy indicates their support for the move from traditional high-touch models to smart-touch by clearly stating that the “accreditation program recognizes and accommodates these differences” (among specialty pharmacies) by “empowering organizations to develop customized workflows that align with their business model and meet the needs of their patient populations.” Nowhere does it state that all of the required activities must be completed by humans.

Underscoring the budding relationship that consumers are building with digital technology, recent research indicates that 37% of Alexa and Siri users wish their virtual assistants were real. With consumer adoption accelerating, the threat that “technology will eat medicine” becomes more tangible each day. Making things even more urgent for specialty pharmacies is that Amazon is not unique in the threat they represent to traditional health care organizations.

With the development of commercially available driverless cars in the rear-view mirror—after less than a decade of effort—tech giants have aggressively set their sights on health care as the industry most ripe for disruption. It is clear that tech companies are willing to invest in and own the patient relationship.

Fueled by artificial intelligence, advanced data parsing capabilities, neural networks, etc, the so-called Fourth Industrial Revolution is upon us. Ignore the impact this movement will have on the current inefficiencies in consumer engagement that are so prevalent in health care at your own peril, as the consumerization and full democratization of health care moves closer to reality.