Amazon Tries to Move into Health Care - More

Last week, Amazon announced another Prime membership benefit, one that strays far beyond a new type of shipping or a peek at a holiday deal. Amazon will offer discounted subscriptions to primary care provider One Medical to US Prime members. Of course, Amazon owns One Medical, purchasing it for $3.9 billion in 2022. Prime members will pay $99 per year (or $9 monthly), instead of the regular rate of $199 per year. The Wall Street Journal reported on this deal, and quoted our initial caution, “going into healthcare ‘is a more intimate relationship which Amazon customers may or may not want to have with Amazon.’” 

Of course, Amazon has about 170 million Prime members in the US, so it can expose this deal to an enormous customer base. One Medical, which also owns clinics, ended 2022 with 836,000 members to its telehealth service, or about 0.5% of the size of US Amazon Prime. 

We wondered what Amazon can expect to bring to One Medical with this move. A look at a related healthcare product, Amazon’s pharmaceutical sales, encourages modest expectations.

Overall, a very small share of Amazon customers fill prescriptions through Amazon’s pharmacy business. This includes PillPack, which Amazon purchased in 2018. In the last 12 months, about 2% of US Amazon shoppers filled their most recent prescription order at Amazon (Chart 1). National chains (Walgreens, CVS, RiteAid), grocery stores (including Walmart), and local pharmacies together account for about 90% of prescription orders.