Shares of GoodRx (GDRX) are under pressure on Tuesday after Amazon launched RxPass, a new Prime membership benefit for a monthly fee of $5, which Citi says poses a "credible threat" to GoodRx.
RXPASS: Amazon announced on Tuesday morning that it is launching RxPass in the U.S., a new drug subscription exclusive to Prime members that charges users a $5 monthly fee to ship eligible prescription medications to their homes. The RxPass subscription program provides generic medications to treat over 80 common health conditions, including high blood pressure, anxiety, diabetes and male pattern baldness, Vin Gupta, Amazon Pharmacy’s chief medical officer, told Reuters.. RxPass is available starting today in most U.S. states, Amazon stated.
In a statement, Amazon said, "Amazon Pharmacy offers choice and convenience, whether customers are paying with insurance or not. When not using insurance, Prime members now have two innovative, affordable options to pay for prescription medications. Prime members who typically take two or more medications per month to manage chronic or ongoing health conditions could save significant time and money with the $5 a month RxPass subscription." It added that "Prime members can save with the Prime prescription savings benefit-available for no additional fee-to get discounts up to 80% off generic and 40% off brand name medications at more than 60,000 participating pharmacies nationwide, including Amazon Pharmacy and the PillPack by Amazon Pharmacy service. Amazon Pharmacy and PillPack by Amazon Pharmacy also welcome most health insurance plans, and offer low, transparent pricing for customers who use insurance to pay for their prescription medications. In addition, customers may use their HSA or FSA accounts when not paying with RxPass."
WHAT’S NOTABLE: This is not Amazon’s first foray into healthcare services. The company closed down its Amazon Care telehealth program in November 2022 following a 2019 launch in favor of its newer Amazon Clinic telehealth service. Amazon Pharmacy, which dispenses RxPass subscriptions, launched in 2020.
‘CREDIBLE THREAT’ TO GOODRX: Citi analyst Daniel Grosslight argued that it "is still more economical" to use GoodRx for consumers taking one drug, but feels RxPass will be a "very compelling offering" for the roughly 30% of Americans who are chronically taking two or more drugs, This offering will pressure GoodRx Gold membership, which recently raised its price to $9.99 per month, though GoodRx Gold provides additional benefits such as telehealth visits for $19 vs. $35 at Amazon, added Citi. The firm thinks GoodRx will need to accelerate the pace of product innovation to fend off the "credible" threat from Amazon, which is currently sized at a maximum of $75M-$80M of potential lost revenue.
PRICE ACTION: In late morning trading, shares of GoodRx are down over 4% to $5.40.
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Published first on TheFly
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