Amazon (NASDAQ: AMZN ) and its online pharmacy unit, PillPack, have a significant challenge. On the surface, it appears to involve only a small, Iowa-based healthcare and prescription data technology company, ReMyHealth, but drastically scales up and potentially involves some of the largest retail and mail order pharmacy, MCO / PBMs and pharmacy associations in the nation — and a somewhat ambiguous organization known as Surescripts. Prior to being acquired by Amazon, PillPack had contracts in place with many managed care organizations, PBMs and other entities to be a providing pharmacy in their networks. PillPack’s success in building market access early as an integral part of their business model was just one of the reasons Amazon was impressed enough to acquire them. As an online mail order pharmacy, PillPack is a competitor to the retail pharmacies represented by the NACDS and NCPA that have part ownership in Surescripts. These same retailers compete with PillPack’s parent company, Amazon, for other consumer product sales. CVS Health / Aetna and Cigna / Express Scripts, the two other ownership stakeholders in Surescripts, operate substantial mail order pharmacies PillPack would compete against. Amazon has been entering into healthcare-focused partnerships and collaborations with such notable organizations as Accenture, Berkshire Hathaway, Carnegie Mellon, Cedars-Sinai, Cerner, Change Healthcare, JPMorganChase, Merck, National Institute of Health, University of Pittsburgh, University of Pittsburgh Medical Center and others. Amazon has steeply ramped up its understanding of the healthcare sector and identifying opportunities to develop and deploy commercial actions to succeed within it. Read the complete story and contact John Baresky with any questions...

1. … Jaguars weigh up to 250 pounds; the largest known population exists in the Amazon Rain Forest…
AMAZON AND PILLPACK HAVE OPTIONS
How may a Federal Trade Commission antitrust lawsuit
filed in April, 2019 against Surescripts be a factor?
John G. Baresky 9/25/19
Amazon (NASDAQ: AMZN ) and its online pharmacy unit, PillPack, have a
significant challenge. On the surface, it appears to involve only a small,
Iowa-based healthcare and prescription data technology company,
ReMyHealth, but drastically scales up and potentially involves some of the
largest retail and mail order pharmacy, MCO / PBMs and pharmacy
associations in the nation — and a somewhat ambiguous organization
known as Surescripts.

2. Amazon / PillPack and ReMyHealth…
PillPack had a contract with ReMyHealth to access patient medication
history and other data which PillPack uses to better manage prescriptions for
its patients. Founded in 2013 and based in Des Moines, Iowa, ReMyHealth
develops data solutions and services that automate a series of processes
involving prescription drug claims, patient insurance eligibility verification,
prior authorization and other exchanges of healthcare data.
ReMyHealth and Surescripts…
ReMyHealth sourced prescription data from Surescripts. Founded in 2001
and based in Arlington, Virginia, SureScripts is a healthcare information
technology organization that works with e-prescribing, pharmacy claims
processing data between healthcare organizations (providers, payers) and
pharmacies plus other medical record data transactions. ReMyHealth
depended on SureScripts to provide it with access to patient medication
history so it could provide services to Amazon’s PillPack. Surescripts
terminated their contract with ReMyHealth as they assert ReMyHealth
improperly shared data outside of the terms of their contract.
ReMyHealth has denied this but Surescripts cut them off from accessing its
data, claimed fraud and reported the issue to the FBI. Surescripts asserts
ReMyHealth claimed to be using the patient prescription data to support
patient care being conducted in the hospital sector ( not PillPack / Amazon
)and was using National Provider Identifiers ( referred to as “NPIs”)
improperly.
Pharmacy Services And Patient Care Issues…
Being a small company, ReMyHealth is at a significant disadvantage. They
are not able to support Amazon / PillPack or other clients aligned with data
they sourced from Surescripts. Although Amazon is a sizable enterprise, its
PillPack venture is just getting off the ground; Amazon acquired PillPack for
about $753 million dollars in 2018. Amazon has numerous healthcare
initiatives underway and PillPack is an important component in their strategic
plans to widen their presence in the healthcare sector.

3. Without the data Surescripts provides, PillPack and ReMyHealth are
burdened with manually verifying patient medication history and other details
through phone calls or other means of communication with patients, medical
professionals and healthcare provider organizations.
Who and what is Surescripts?
The healthcare industry and prescription drug marketplace are a
competitive, complex environment with a myriad of clinical, financial and
technical processes facilitated by an array of different organizations.
Surescripts is privately-held and although it was formed in 2001, its
ownership for the most part has an older pedigree:
• CVS Health ( who owns Aetna ); CVS was founded in 1963, Aetna
dates to 1857
• Express Scripts ( owned by Cigna ) started up in 1986, Cigna
began in 1792
• National Association of Chain Drug Stores ( NACDS ) was
founded in 1933
• National Community Pharmacists Association ( NCPA ) began in
1898
PillPack’s Success…
Prior to being acquired by Amazon, PillPack had contracts in place with
many managed care organizations, PBMs and other entities to be a
providing pharmacy in their networks. PillPack’s success in building market
access early as an integral part of their business model was just one of the
reasons Amazon was impressed enough to acquire them. PillPack had lined
up these and other entities in their contracting:
• Aetna
• CastiaRX
• Cigna ( Cigna owns Express Scripts )

4. • CVS Caremark ( a Surescripts stakeholder)
• EnvisionRx
• Express Scripts ( a Surescripts stakeholder )
• Humana Pharmacy Solutions ( a Surescripts stakeholder )
• MedImpact
• OptumRx
• Prime Therapeutics
Find out more about PillPack and Amazon in the healthcare sector:
Amazon Web Services / AWS Teams Up With Pittsburgh Health Data
Alliance
Amazon Ventures Further Into Consumer Healthcare With PillPack
Amazon Web Services / AWS In Talks With EHR / EMR Healthcare Data
Giant Cerner
Amazon: Who Will They Bite In Healthcare?
Amazon: Preparing To Flood The Healthcare Industry
A New Competitive Threat Emerges…
Now that PillPack is owned by Amazon, a new and more substantial
competitive threat has emerged. PillPack is no longer just one of many
lesser-scale pharmacies eligible to fill prescriptions for the programs of the
customers they have contracted with. As a unit of Amazon, they bring a
whole new dimension in scope and scale to this picture as Amazon has
been very successful in disrupting long established market sectors, scaling
up service, capturing market share and generating income.

5. As an online mail order pharmacy, PillPack is a competitor to the retail
pharmacies represented by the NACDS and NCPA that have part ownership
in Surescripts. These same retailers compete with PillPack’s parent
company, Amazon, for other consumer product sales. CVS Health / Aetna
and Cigna / Express Scripts, the two other ownership stakeholders in
Surescripts, operate substantial mail order pharmacies PillPack would
compete against.
The Controversy Unfolds…
Was the alleged breach of contract by ReMyHealth a bonafide violation
of the agreement between ReMyHealth and Surescripts or was it
potentially overblown by Surescripts (and their ownership) as a way to
slow down Amazon’s advance into healthcare and PillPack’s growth?
The Federal Trade Commission And Surescripts…
Prior to the present issue between Amazon / PillPack, ReMyHealth and
Surescripts, the Federal Trade Commission filed suit against Surescripts on
April 17, 2019. The Federal Trade Commission ( FTC ) sued Surescripts by
alleging the company employed illegal vertical and horizontal restraints in
order to maintain monopolies over two electronic prescribing, or “e-
prescribing,” markets: routing and eligibility.
In the complaint filed on April 17, 2019 against Surescripts, the Federal
Trade Commission is seeking to take decisive action to undo and prevent
Surescripts’s unfair methods of competition, restore competition and provide
monetary redress to consumers.
Bureau of Competition Director Bruce Hoffman weighed in with these
comments…
“For the past decade, Surescripts has used a series of anticompetitive
contracts throughout the e-prescribing industry to eliminate competition
and keep out competitors. Surescripts’s illegal contracts denied
customers and, ultimately, patients, the benefits of competition —
including lower prices, increased output, thriving innovation, higher
quality and more customer choice.

6. Through this litigation, we hope to eliminate the anticompetitive conduct,
open the relevant markets to competition, and redress the harm that
Surescripts’s conduct has caused.”
According to the complaint, Surescripts monopolized two separate markets
for e-prescription services:
• The market for routing e-prescriptions, which uses technology that
enables health care providers to send electronic prescriptions
directly to pharmacies
• The market for determining eligibility, a separate service that
enables health care providers to electronically determine patients’
eligibility for prescription coverage through access to insurance
coverage and benefits information, usually through a pharmacy
benefit manager
The FTC alleges Surescripts intentionally set out to keep e-prescription
routing and eligibility customers on both sides of each market from using
additional platforms (a practice known as multihoming) using anticompetitive
exclusivity agreements, threats, and other exclusionary tactics. Among other
things, the FTC alleges that Surescripts took steps to increase the costs of
routing and eligibility multihoming through loyalty and exclusivity contracts.
According to the FTC’s complaint, Surescripts successfully used these
tactics to stop multiple attempts by other companies to enhance
competition in the routing and eligibility markets. According to the
FTC’s complaint, Surescripts’s anticompetitive tactics thwarted
competitors from gaining share in the routing and eligibility markets,
enabling the company to maintain at least a 95 percent share in each
market over many years.
The complaint alleges Surescripts succeeded in maintaining its monopolies
in routing and eligibility, despite the explosive growth of routing and eligibility
transactions — from nearly 70 million routing transactions in 2008 to more
than 1.7 billion in 2017.

7. The Commission vote to file the complaint was 5–0. The complaint was filed
under seal in the U.S. District Court for the District of Columbia on April 17,
2019. A redacted version of the complaint was also filed. The complaint
alleges that Surescripts’s anticompetitive acts violate Section 2 of the
Sherman Act, and thus constitute an unfair method of competition, in
violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).
Complete Details Are Contained In This FTC Press Release…
Federal Trade Commission Charges Surescripts With Illegal Monopolization
of E-Prescription
Surescripts’ Market Dominance…
It is not surprising the FTC has taken notice of Surescripts’ overwhelmingly
controlling position. The rate of growth and volume they have accumulated is
impressive but also concerning. Based on these and other touchpoints, how
can one entity lockdown so much business considering:
• Explosive intellectual and financial investment in growth of digital
technology and data security advancements in healthcare
• Multiple tech heavy hitters in the healthcare, data technology and
claims processing space: Accurence, Agero, Amazon, Apache,
Apple, Arista, athenahealth, Cisco, Conifer, Convergent, Dell /
EMC, Equifax, Experian, Google, HP, HRG, JDI, Merriman,
Microsoft, Napersoft, Octo, Oracle, Origami, Plexis, SAP, SAS,
Teradata, The Shams Group, TransUnion, Virtual Benefits
Administrator, VMWare and many more…
• The growing demand for interoperability and accelerated data
sharing between patients, providers, payers and other
stakeholders to lower costs and improve access to healthcare data
not only for patient services but medical research and other
purposes as well
Individually and combined, the scope of Surescripts’ dominance in light of
these elements is an anomaly that warrants scrutiny as a monopoly. Another
issue is one of improvement and economics.

8. Given Surescripts’ commanding position, what incentive is there for them to
earnestly pursue innovation?
Yes, they do have to make changes to stay aligned with technology as it
advances but the drive to go above and beyond may not necessarily be a
priority as long as they can fortify their present comfortable position. How
does this impact better patient care, data sharing and cost reduction?
Reportedly Surescripts has made some changes to their contracting
requirements and policies concerning loyalty and exclusivity terms but by
changing them as of late does not undo what has already taken place. The
alleged monopoly may reduce information and interoperability outside of the
confines of its contracted customers.
With the exception of Express Scripts founded in 1986 (acquired by Cigna in
2018), the Surescripts ownership could be considered “the old guard”
arguably protecting its turf against an unexpected and formidable foe in the
form of PillPack and Amazon. Given the scope and scale of SureScripts, as
long as its technology and support services show progress, an argument on
their behalf could be made that they bring reliability, standardization and
security to a wide selection of diverse stakeholders but at the expense of
competition within their services sector.
Amazon And PillPack Have Options…
Clearly Amazon and PillPack have a serious situation on their hands but
Amazon is not a company to be trifled with. They have extraordinary
financial, technical and operational resources to rally with and PillPack is a
compact business unit that can be given ample additional support while
being nimbly steered through these circumstances.

9. Undoubtedly these are just five among many options Amazon and PillPack
are potentially considering:
• They can contract with a company similar to or a direct competitor
of ReMyHealth to get access to prescription data and support; this
could include partnering with a PBM and / or managed care
organization
• Mirror the solutions and services ReMyHealth provides by building
their own capabilities and contracting directly with Surescripts
• Lean on ReMyHealth and Surescripts to reinstate the contract at
least until they ( Amazon ) can devise a plan to move forward
without ReMyHealth
• Take full-on legal action on their own behalf against ReMyHealth
and more productively speaking, Surescripts
• Choose innovation to circumvent conventional arrangements in
place between Surescripts / Surescript ownership to develop a
new data sharing arrangement or an entirely new business model
of prescription information sharing, patient support and new
business generation
The last option may be the most dangerous one for Amazon / PillPack
competitors. Amazon’s entrepreneurial staff and data technology prowess
are serious adversaries to contend with. Amazon has been entering into
healthcare-focused partnerships and collaborations with such notable
organizations as Accenture, Berkshire Hathaway, Carnegie Mellon, Cedars-
Sinai, Cerner, Change Healthcare, JPMorganChase, Merck, National
Institute of Health, University of Pittsburgh, University of Pittsburgh Medical
Center and others. Amazon has steeply ramped up its understanding of the
healthcare sector and identifying opportunities to develop and deploy
commercial actions to succeed within it.
Considering these relationships, PillPack’s attributes and Amazon’s
resources, no one would be surprised if they developed a novel strategy
and technology solution to this issue but competitors would certainly be
disappointed.

10. Questions Remaining…
Looking ahead, a lot of new developments will manifest themselves based
on the outcome of these and other questions:
• As consumer and healthcare watchdog groups as well as
politicians learn more about Surescripts, how may they feel about
the enormous amount of data being processed by one entity and
who has final say as to how and with whom individual patient data
is shared; the patient or Surescripts?
• How will Surescripts fare in litigation proceedings filed against
them by the FTC?
• How legitimate, egregious were ReMyHealth’s alleged contract
violations with Surescripts; how may the FBI proceed with them
and what recourse do they have if they can’t successfully defend
their position?
• How closely does Surescripts enforce the standards they applied
towards ReMyHealth to the rest of their clients?
• How will Amazon / PillPack resolve this issue and outdistance it
moving forward?
• What firms will seize the opportunity to work with Amazon /
PillPack in their hour of need?
• How may Amazon’s new employee health program, Amazon Care,
be a catalyst for change in these circumstances?
Moving forward…
An election year is approaching; healthcare costs and commercial practices
are a hot political topic. Many stakeholders, including political, consumer,
patient, employer, MCO, PBM, pharmacy, the investor community and
others will be scrutinizing the litigation proceedings between the FTC and
Surescripts. Compared to other entities like pharmaceutical manufacturers,
GPOs, PBMs and MCOs; as an organization Surescripts has been able to
operate in relative obscurity for years. This will rapidly change once things
are underway in the court room.

11. Surescripts has built an impressive organization serving the interests of
many stakeholders. If it does not successfully defend itself, how may its
ability to service its enormous customer base be impacted if the FTC orders
significant changes to their operations and business model? What
competitors will surge forward in their space?
Amazon and PillPack are pressing ahead. It is safe to assume Amazon
seeks to resolve this issue as quickly as possible and redouble its efforts to
build out its online pharmacy business and launch other healthcare initiatives
soon. By contracting directly with Surescripts, an easy solution could be
reached. If such an agreement is not possible, could Amazon’s solution be
innovative enough to be a competitive and disruptive force in pharmacy and
the healthcare industry?
Thank you for reading this article. Check out my other stories about
healthcare industry trends, mergers and acquisitions, clinical and
commercial trends, technology, digital marketing, market access and
social media strategy…
About me
I lead healthcare marketing initiatives spanning pharmaceutical, medical
device technology, clinical programs, health services, healthcare RPA (
robotic process automation ), software, SaaS and managed care. My
background covers team building, digital marketing, brand and product
management, content development, content marketing, upstream and
downstream marketing and market access strategy.
Connect with me at LinkedIn, Twitter, Email or my website
LinkedIn:
John G. Baresky

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