Lawsuit sheds light on Amazon's pharmacy strategy

Amazon is looking to contract with health plans and employers to sell prescription drugs through PillPack, the online pharmacy it acquired last year, STAT reports, citing newly released court documents.

The new revelations about Amazon's plans were contained in a lawsuit CVS filed earlier this year, seeking to bar one of its former CVS Caremark executives from working at PillPack. A judge recently ruled in favor of CVS, preventing former exec John Lavin from joining the online pharmacy unit for at least 18 months due to a noncompete agreement.

In the complaint, CVS claimed that PillPack was approaching CVS Caremark clients, including Blue Cross Blue Shield, "to provide its members with prescription home delivery," according to healthcare news website STAT.

CVS Caremark is the pharmacy benefit manager unit of CVS Health.

The judge concluded in the lawsuit that PillPack was a CVS competitor. By directly contracting with health plans and employers, Amazon-PillPack may soon become its own PBM, greatly shaking up the prescription drug market.

"We thought PillPack had to gain enough support from employers to force Express Scripts, [CVS] Caremark and Optum to keep them in their networks," analysts from financial firm Jefferies wrote in a research note to investors. "But going direct to payers eliminates this need or minimizes this risk for Amazon, especially if they can gain enough scale and traction quickly."

It is unclear whether Amazon will work directly with health plans to distribute drugs. It may be exploring other avenues.

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