This is an excerpt from Medically Necessary, a health care supply chain newsletterSubscribe here.

The impact: Amazon’s supply chain has had an enormous impact on the way consumers buy books, clothes and a huge array of other products.

Over the past several years, the company — and its legendary supply chain — has been creeping into health care.  

According to Business Insider, the company is now considering plans to start a diagnostic testing business and open physical pharmacies.

So far, Amazon hasn’t upended health care the same way it changed retail. It’s not clear if the recent steps will have a bigger impact.

Background: In 2018, Amazon acquired PillPack, a company that provides convenient packaging for patients taking multiple medications. 

In November, the company launched Amazon Pharmacy, allowing customers to fill prescriptions on and ship them to their homes for free.

In March, Amazon announced it would make its virtual health care platform Amazon Care available to other businesses seeking to offer health care for employees. 

The platform also offers some in-person care at patients’ homes, which is also expanding to new cities.

During the pandemic, Amazon’s own lab tested more than 1 million employees for COVID-19. The company also offered to help the federal government distribute vaccines, especially to Amazon employees.

The news: According to Business Insider, there are no formal plans to open physical pharmacies. The discussions still preliminary and setting up physical locations would probably take more than a year.

One option would be using Amazon’s Whole Foods locations to house the physical pharmacies, according to the report. 

That report follows another Business Insider report, published last week, that Amazon plans to start a brand of at-home diagnostic tests for a range of diseases, including COVID-19. 

The Food and Drug Administration approved a COVID-19 test developed by Amazon in February, according to STAT.

The plans are still in the early stages, but Amazon employees told Business Insider the company could start offering tests for respiratory infections, sexually transmitted infections or even tests for genetic diseases. 

The reaction: Mizuho analyst Ann Hynes told Reuters that Amazon’s push into the pharmacy business is not new, so physical locations are not a huge surprise.

Adam Fein, CEO of the analysis site Drug Channels, went further. On Twitter, he called the plan “basically insignificant.” There are only a few hundred Whole Foods locations, he argued, compared to tens of thousands of retail pharmacies. 

“More non-disruption. Once again, Amazon can’t or won’t change the #pharmacy channel,” Fein wrote.

Last week, Fein pointed to Amazon’s relatively small impact on the grocery industry, despite the acquisition of Whole Foods, as evidence that its domination of the pharmacy market is not inevitable.
Still, traders were spooked. Share prices for Walgreens, CVS and other pharmacies dropped after the report. They quickly bounced back.