RxPass Offers Access to Low-cost Drugs, but Not for Medicare Enrollees

Hunter,Erin;

In January 2023, Amazon lauched RxPass, allowing Prime members to receive unlimited access to and the delivery of more than 60 common generic prescription drugs for a flat fee of $5 per month.¹

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Amazon is the most recent in a string of companies to enter the generic market. For example, in 2022, billionaire Mark Cuban launched the Mark Cuban Cost Plus Drug Company, an online pharmacy that provides generic medications with price transparency.²

Generic medications accounted for 86% of all United States prescriptions by volume in 2022, according to Elizabeth Anderson, a managing director and research analyst on Evercore ISI’s Health Care Technology & Distribution Team.^1,3

Generic companies are combating high drug costs in the United States³ of approximately $1300 per individual on average each year.⁴

Amazon is promoting RxPass as being accessible to patients and helping them overcome barriers, including insurance, which may reflect a larger cultural shift to affordably accessing prescription medications, according to Karen Van Nuys, PhD, executive director of the Value of Life Sciences Innovation program at the USC Leonard D. Schaeffer Center for Health Policy & Economics in Los Angeles, California.^2-4

“Navigating insurance can be a maze and getting to the pharmacy a burden,” Vin Gupta, MD, MPA, chief medical officer at Amazon Pharmacy, wrote on Amazon’s website. “Sometimes that has led to poor outcomes: new medications don’t get filled, refills don’t get picked up, and patients suffer. Aspects of our healthcare system make what should be easy, difficult,” Gupta wrote.⁵

RxPass and its low costs are intended to benefit patients with poor or no insurance, but it excludes patients with Medicaid, Medicare, and government health care programs who have no co-pays.² This is to the detriment of those enrollees, who can spend up to 20% more for generics, because pharmacy benefit managers and insurance companies inflate retail generic prices.³

A 2018 study compared the cost of generics between Costco members and patients with Medicare Part D stand-alone drug plans. Patients with Medicare paid an average of $2.6 billion more than non-Medicare Costco members for 184 common generics.³

The results of another study showed that Medicare formularies more often assign generic drugs to a higher tier than branded drugs, charging enrollees more for products normally on a lower-cost tier.³

RxPass is limited to mail-order prescriptions.² Despite being an alternate distribution method, it is nearly impossible to discuss that prescription with a pharmacist at pickup.⁶

Further, RxPass is not available in California, Louisiana, Maryland, Minnesota, New Hampshire, Pennsylvania, Texas, and Washington because of specific prescription delivery requirements.⁷

One of the most significant drawbacks of the RxPass program is the limited scope of its drug selection. Cost Plus offers more than 300 generic prescriptions, including novel cancer drugs, RxPass carries approximately one-fifth that number.²

Nevertheless, experts suggest that Amazon offers a unique approach that can shake up the generic drug market.⁷

Z. John Lu, PhD, director of the UCLA Seminar on Pharmaceutical Economics and Policy at the UCLA Fielding School of Public Health, Los Angeles, said that “Amazon’s real goal is probably to be the king of online pharmacies, replacing many retail, in-person pharmacies over time.”⁴

But RxPass and other generic suppliers cannot control expensive brand-name drug pricing, and brand-name drugs continue to drive US drug spending.¹

“This is still day 1 for us where we’re at our beginning stages here, but we recognize that change is needed,” Gupta said. “That’s what patients across the country are telling us, and that’s what Amazon is responding to.”⁷