The Amazon-Berkshire-JPMorgan Health Venture & Amazon … 2020/ASAPJan20_Presentatio… ·...

American Society for Automation in Pharmacy2020 Annual ConferenceJanuary 15–17 • Amelia Island, Fla. • www.asapnet.org • #ASAPAnnual

The Amazon-Berkshire-JPMorgan Health Venture & Amazon Pillpack:

The Latest

Marsha K. Millonig, MBA, BPharm

President & CEO

Catalyst Enterprises, LLC


Today

These ventures are examples of many of the disruptions in health care:

• What are they trying to do?

• Where are things at?

• What could it mean?

• What are your thoughts?


Disruptive innovation…

It has played out in markets from home entertainment to teeth whitening, and it could make health care delivery more effective by making providers’ care processes, as well as individuals’ own self-care regimes easier and less costly. This, in turn, would reduce the need for both more, and more expensive, interventions over time.

The Headlines…

It can be exhausting!

Why?

• Fortune 500 companies spent more than $265 billion in healthcare costs in 2017 (EY data)

• Large employers pay $14,000 for annual health care costs for their employees

• Spending approaching 18% GDP ($3.65 trillion in 2018) and growing 5.7% annually

• $11,212 per person with 4.5% increase in commercial plan spending with stable enrollment

• Waste estimated to be $765 billion per year

National Business Group: 2019 Health Care Strategy and Plan Design SurveyFortune: https://fortune.com/2019/02/21/us-health-care-costs-2/


Why?

• Too expensive

– Can costs be lowered?

• Too inefficient

– Can processes be standardized?

• Too insurer/provider centric

– Can patients/consumers be empowered?


Push Back

• So to answer Stockert’s question, is this actually what we really want or need in healthcare? Most definitely. Because disruption is one of the most powerful mechanisms we know for overcoming what Stockert aptly describes as many powerful incumbents’ “ruthless resistance to any alteration of the status quo.” R. Fogg


Fogg continues…

• I believe disruption is going to have a dramatic and positive influence in healthcare. In that case, faced with a choice between adapting to the disruptors and ‘extinction,’ resistant incumbents may want to rethink their historic stance.


Timing is Right

• Health care delivery attracting diverse and impressive new players

• New players are targeting important, unmet needs in market

• New players are shaping innovations to disrupt traditional healthcare delivery

• Global market for population health management solutions is growing fast

Rebecca Fogg, Clayton Christensen Institute


The question…

Can simplicity, convenience, accessibility and affordability

…be introduced where complication and high cost have become the status quo?

They are Going to Try!!


Quick Recap• Jan 2018 Amazon-Berkshire-JPMorgan Health

Venture– Aims at intermediaries

– Reduce wasteful spending• Health care costs are “a hungry tapeworm on the American

economy” Warren Buffett

– Free from profit-making incentives and constraints

– Initial focus on technology solutions that provide US employees of the three firms with simplified, high-quality and transparent healthcare at reasonable cost

– 1.2 million individuals


Quick Recap

• June 2018 Venture hires CEO

• Atul Gawande, Harvard surgeon and journalist

• “My job for them is to figure out ways that we’re going to drive better outcomes, better satisfaction with care and better cost efficiency with new models that can be incubated for all.”


Targeting…

• Administrative costs

– Looking at middlemen

• High prices

• Improper health-care usage

– Make it easier for chronically ill employees to access and select cost-effective providers

• Long time horizon


2019 Goals

• We will be an advocate for the patient and an ally to anyone – clinicians, industry leaders, innovators, policymakers, and others – who makes patient care and costs better.

• We will create new solutions and work to change systems, technologies, contracts, policy, and whatever else is in the way of better health care.

Quick Recap

• Sept 2018: Venture hired Jack Stoddard COO

– Most recently Comcast’s GM for digital health

– Worked at United Health’s Optum Services

– Comcast considered forefront of health insurance innovation


Quick Recap

• Sept 2018

• Venture hires the Monitor Group

– Global consulting firm in Boston

– Develop strategy

– Known for identifying services and technologies to connect companies with their customers


Fast Forward

• March 2019: Venture named Haven

• Launches Website: https://havenhealthcare.com/

…We want you to get the right care, every time so that you can live your best life possible…

https://havenhealthcare.com/

March 2019• Announced Board Members• Said it will offer solutions to others outside the 1.2 million

employees– eventually• Key Leadership:

– Dr. Atul Gawande, CEO– Michael Higgins, chief information security officer– Serkan Kutan, chief technology officer– Megan McLean, chief of staff– Dana Safran, head of measurement– Jack Stoddard, chief operating officer– Liam Brenner, acting head of finance– Mary Jane Favazza, general manager– Brooke Thurston, head of communications

https://www.geekwire.com/2019/amazons-healthcare-joint-venture-name-haven-website-revealing-details-initiative/


We will be relentless. We will insure our work has high impact and is sustainable. And we are committed to doing this work for the long-term.

Atul Gawande, MD, MPH

CEO, Haven

Contract Lawsuit Testimony is Revealing Feb 2019

• Insurance benefits, primary care and pharmacy costs will be at the center

• Health benefits: can it “reinvent what insurance looks like in terms of benefit design”

• Primary care: boost primary care and encourage physicians to spend “more time, not less time” with patients

• Pharmacy costs: bring down drug spending, but said it wouldn’t compete with pharmacy-benefit managers.

• “But we will look and say, could we contract with one of them to get more transparency?”

• Amazon’s acquisition of online pharmacy PillPack last year raised a number of questions around what the joint venture might do in the pharmacy space. Stoddard said the company wouldn’t compete directly with Optum, which operates a large pharmacy benefit manager as well as many other health services.

https://www.geekwire.com/2019/amazons-new-healthcare-joint-venture-aims-reinvent-benefits-cut-drug-costs-boost-primary-care/


Where Are Things At?

• Jack Stoddard resigns after 9 months citing commuting pressure (Philly to Boston)

• Other disruptors have emerged

• Many of them figured that the Haven project was “extremely overrated,” said VivekGaripalli, founder and CEO of Clover Health, a San Francisco-based health insurance startup with a goal similar to Haven’s: save healthcare in America.


• Garipalli: “I think sometimes, when individuals hit such a high-level

[of] success, he would think he could solve anything—part-time, as well. To make a comparison, I think UnitedHealth would have a higher probability of building a successful commercial bank than JPMorganwouldin terms of fixing health care.”

• Buffet: “It is going to a long, tough pull to make major changes,”

Buffett said during a CNBC interview in May. “But there’s nobody I think that’s in a better position, in terms of number of employees, ability of the people that are partnering to get along and all kinds of things, to perhaps come up with something to make the system more efficient.”

https://observer.com/2019/10/haven-healthcare-amazon-jpmorgan-berkshire-hathaway-clover-health-ceo-insurance/

https://observer.com/2019/02/jpmorgan-chase-issue-cryptocurrency-jpm-coin/


Hiring a Variety of Areas

• Clinical

• Operations

• Program Design

• Administrative

• IT

Haven Begins Testing Plan 11/2019

• Employees in a handful of states• JPMorgan

– 30,000 workers in OH, AZ– 2 plans by Cigna Corp. and Aetna Inc.– 20% of workforce

• Amazon – CT, NC, UT, WI– Focused on better understanding health costs and

primary care

• Plan to monitor employee receptiveness

https://www.americanbanker.com/articles/jpmorgan-tests-its-amazon-berkshire-health-venture-on-bank-employees


9/2019

• Amazon announced its plans to launch Amazon Care, a virtual primary care offering for its Seattle-based employees. Amazon Care will include telemedicine, online chat with a nurse, medication delivery and app-enabled house calls to the employee's office or home. Amazon said it does not plan on hiring any doctors; instead, the company is contracting with a local clinic called Oasis Medical Group.

10/2019

• Amazon swooped in to acquire digital health startup Health Navigator for an undisclosed amount. The Illinois-based company offers digital health clinical content in the form of APIs that can be used by EHRs, telemedicine providers, health chatbots and medical call centers

https://pages.healthcareitnews.com/index.php/email/emailWebview


• June 2018• Amazon buys PillPack $753 million• Medications in pre-sorted dose packaging• Coordinate refills• Handles shipments• “PillPack’s visionary team has a combination of

deep pharmacy experience and a focus on technology,” Jef Wilke, Amazon’s CEO of worldwide consumer

• 11/2019 rebrands: Pillpack: By Amazon Pharmacy

https://www.bloomberg.com/news/articles/2019-09-16/amazon-s-battle-for-corner-pharmacy-is-fought-over-phone-and-fax


Amazon/PillPack

• “Pillpack is meaningfully improving its customers’ lives and we want to help them continue making it easy for people to save time, simplify their lives, and feel healthier.”

Running into Snags: Transfers

• “People take it and throw it in the trash or ignore it and don't do anything with it,” said TJ Parker, PillPack's 33-year-old co-founder and chief executive officer, in an interview. And when PillPack technicians call to follow up, some pharmacists are “literally hanging up the phone without saying anything, which happens probably daily.”

https://www.bloomberg.com/news/articles/2019-09-16/amazon-s-battle-for-corner-pharmacy-is-fought-over-phone-and-fax


Hitting Snags

• When PillPack was new, there was rarely a problem getting prescriptions transferred, according to interviews with three former PillPack pharmacy technicians, who requested anonymity to discuss sensitive information. But once it hit the radar screen of the big chains, transfers became harder as drugstores increasingly insisted on direct confirmation from the patients, they said.


Hitting Snags

• CVS and other drugstores:

• Delays in the process to be sure patients agreed to have their prescriptions transferred

• Pillpack things they are stonewalling

• CVS filed injunction in 6/2019 to keep an exec from joining the company to avert sensitive pricing information to be given to Amazon


Ensuring Patient Consent

• CVS and Walgreens sent cease-and-desist letters to PillPack in 2018, warning the company against transferring customers without their consent.

• Both have taken steps to ensure that patients really want to switch.

• Independents report patients were confused and did not want to transfer


Hitting Snags

• Several independents invest in similar packaging technology, call their patients and retain them

• Pillpack’s SLC call center personnel were given commission to make calls, especially to elderly

• Since Amazon’s acquisition, it has eliminated outbound calls

Hitting Snags

• Surescripts cut the company off for misusing data

https://www.fiercehealthcare.com/tech/surescripts-terminates-contract-remy-health-hindering-pillpack-s-access-to-patient


Work Arounds

• Phone follow ups

• Getting new Rx’s from patients' doctors

• Claims ReMy was to help patients not have to remember their medication lists

• Tracking pharmacies that it believes have been uncooperative.

• States generally require pharmacies to fulfill valid prescription-transfer requests.


11/2019

• Amazon added a new feature that lets users link up their pharmacy prescription information and, in turn, get reminders about when to take their pills and order refills. The latest feature was born out of a collaboration between the online retail giant and Omnicell, a tech-enabled medication management company.


12/2019

• Amazon’s PillPack made a deal with Blue Cross Blue Shield of Massachusetts. As part of the deal, PillPack’s services will integrate into the payer’s MyBlue member app. As part of the agreement, Blue Cross members will have the option to switch their prescriptions over to PillPack directly from the MyBlue app without having to re-enter their insurance details or medication list.


Hiring

• Amazon pharmacy hires a UMN College of Pharmacy Grad in Nov 2018:

• “I will be more than happy to chat in the near future, though it may be a while before I can provide any useful information since today was my first day and as of now, there isn't much implemented. Please feel free to reach out in the near future as we launch in early 2019. ”


From the Inside: We are forever expanding…24/7

AustinAmazon Pharmacy #001220 Industrial BlvdAustin, TX 78745

BrooklynAmazon Pharmacy #00434 35th Street, Suite 4BSWBrooklyn, NY 11232

ManchesterPillPack by Amazon Pharmacy250 Commercial Street, Suite 2012Manchester, NH 03101

MiamiAmazon Pharmacy #0038725 NW, 13th TerraceMiami, FL 33172

PhoenixAmazon Pharmacy #0023809 E Watkins StPhoenix, AZ 85034

• Licensed in all 50 states

• Discrepancy between Pillpack 5 locations and their website

• Says taking time to update Web

How to Compete

• Emphasize “live” pharmacist

• Reposition pharmacist as health coach

• Capitalize on location

• Beat disrupters at their own game

– Free delivery

– Dose packaging

https://www.statnews.com/2018/12/13/how-traditional-pharmacies-survive-amazon-threat/


Amazon…

• Tons of cash

• Unparalleled logistical network

• Past when poised to enter/expand its market position, traders get scared and bail out of existing holding in other companies


American Eager to Buy

• More than 70% of US consumers and 85% of Amazon Prime members with health insurance say they would buy their prescriptions on Amazon

• Hope they will save them from high drug prices

• Deutsche Bank survey 2018


What Would Consumers Look for?

• 55% Prime members and 79% without Prime chose lower prices

• Other options were 1-2 hour deliver, availability at local Whole Foods or other retail store

• Discount of 10-20% say Prime members 30% or more for non-Prime subscribers

• Young people expressed the most interest but over ½ of those over 65 says they would purchase


What Would Consumers Look for?

• People without health insurance were most interested of all

• 89% of Prime members and 82% of non-Prime subscribers


Amazon (noted by 6 in 10 healthcare execs), followed by Apple, Google, Microsoft, IBM, Walmart and Salesforce


Amazon Today

• Titan of:

– E-commerce

– Logistics

– Payment

– Hardware

– Data storage

– Media


Amazon Culture

• CEO Jeff Bezos “flywheel” philosophy

• Cut prices to attract customers, increases sales and attract more customers leading to economies of scale allowing more cuts

• Named after the world’s biggest river

• Purchased the web address relentless.com

• Workers paint picture of ruthless workplace driven by productivity demand


Amazon

• Public 1997

• Bled money for 6 years

• Barely eeked a profit the next decade

• Stayed true to the flywheel

• $100 in Amazon IPO worth $63,990 on company’s 20th anniversary in May


2nd Company to Surpass $1 Trillion


Amazon

• Bezos divorced in 2019

• MacKenzie Bezos received 25% of the couple's Amazon stock

• 4% stake in the company, which will amount to around $38 billion.


Amazon Logistics

• 180+ warehouses

• Compares to HDA’s 35 members with 176

• 44% of the US population lives within 20 miles of an Amazon warehouse or delivery station

• Capable of offering same-day/1-day delivery to 72% of the total population (CNBC)

• Exploring drones, self-driving trucks

• Taking more control over logistics functions with lower cost/better turnaround than FedEx

Amazon

• 105 million Prime subscriptions 6/2019

• About 2/3rds of American households

• This holiday: more than 5 million new customers starting Prime free trials or beginning paid memberships worldwide in just one week alone.

https://www.statista.com/statistics/546894/number-of-amazon-prime-paying-members/

What Could it Mean?

Big bang disruptions…

Innovations which are simultaneously better, cheaper and more customized than current offers—and they’re putting major players out of business. Since 2000, 52 percent of companies in the Fortune 500 have either gone bankrupt, been acquired or ceased to exist. In addition, the life of a Fortune 500 company keeps shortening, from 75 years to less than 15 years today.

What Could it Mean?

• 10% of all earning calls in the US in 2016 mentioned Amazon

• Bayer coined it “The Amazon Effect”

• James Brumley, iStock:

• Amazon may not “win” with PillPack in a direct sense, but the rest of the pharmacy industry will certainly lose. It’s just a question of how well it can keep that loss in check.

What Are Your Thoughts?

• Alexa, please refill my medication and deliver it by 5 pm…..have the pharmacist call me on my mobile app…

Thanks for Having Me!

• [email protected]• 651-905-9002

The Amazon-Berkshire-JPMorgan Health Venture & Amazon … 2020/ASAPJan20_Presentatio… ·...

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