Amazon Could Enter The Pharmacy Business – But Should It?

Amazon Could Enter The Pharmacy Business – But Should It?

It’s no secret that Amazon’s foothold in the American economy has been growing for years. What started as an online venture to sell books has morphed into an all-consuming retail giant, offering everything from groceries to furniture. Amazon even sells its own, proprietary products, such as the Kindle e-reader and the Echo personal assistant device. In fact, 46 percent of U.S. households include at least one member of Amazon’s Prime service. Free shipping and cheap pet supplies are one thing, but now, Amazon may enter the pharmacy business, a move that could further threaten local economies and the quality of patient care.

According to Yahoo Finance, Amazon could be hiring someone to lead the pharmacy expansion. It’s not clear when Amazon could begin selling medications, as several regulatory hurdles likely exist to filling prescriptions online, but sources close to the company confirmed to Yahoo Finance that the expansion has been considered for years.

For Amazon, entering the prescription drug space probably seems like a lucrative business decision. However, the decision may not be as lucrative for American consumers and their local economies.

Given Amazon’s popularity for convenience and low prices, consumers may expect to see lower prices on their drugs as a result of Amazon’s potential pharmacy venture. However, it’s far too early to reach that conclusion. According to research from the Institute for Local Self-Reliance (ILSR), local ownership of pharmacies can actually keep prescription drug prices lower than chain ownership.

For instance, North Dakota law requires that all pharmacies in the state have to be owned by licensed pharmacists. In other words, companies like Wal-Mart and Walgreens typically can’t operate their chain pharmacies. Compared with its neighbor South Dakota, which does not require such ownership of pharmacies, North Dakota tends to offer lower prescription drug prices and greater access to pharmacies in rural areas.

In the industries where it currently plays, Amazon’s market status already hurts local economies. According to another ILSR report, the dominance of a few, large retailers – including Amazon – has contributed to the net loss of 108,000 local, independent businesses over the last 15 years. Those local businesses once reinvested more than three times as much money per dollar of sales into their local economies than their big-box counterparts. But as Amazon and similar retailers become more powerful, small retailers lose the ability to have that valuable, local effect.

While the fast, free shipping and seemingly endless inventory offered by Amazon may seem enticing, time and time again, research shows that local is better. Amazon’s foothold in the American economy has grown far beyond its original, literary roots. If there’s anywhere for the buck to stop, it ought to be prescription drugs.

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