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Amazon's PillPack continues to battle against longtime players

Anjalee Khemlani
Senior Reporter

Mail-order prescription service PillPack has been around since 2013. But ever since it was acquired by Amazon (AMZN) last June, it has had a target on its back.

The competition has accused PillPack of engaging in unscrupulous practices — culminating most recently in CVS (CVS) and Walgreens (WBAdenying prescription transfer requests that would have allowed PillPack to fill pharmacy requests.

The report also cited complaints that PillPack has inappropriately obtained patient information, and is signing patients up who did not request to do so.

Yet the issues raised are a year old and no longer a concern, a CVS spokesperson said to Yahoo Finance Wednesday. Sources at PillPack and CVS told Yahoo Finance that last summer, the entities exchanged letters addressing the issue, and any issues have since been resolved.

Still, controversies continue to swirl around PillPack—which some think could exert the disruptive “Amazon effect” on the pharmacy business. PillPack requires clients to switch pharmacies, which CVS and Walgreens are loath to do without a fight.

For its part, PillPack maintains that it would never sign up patients without their consent.

“PillPack only requests prescription transfers with the customer’s explicit and documented consent,” Jacquelyn Miller, a spokesperson for PillPack, said in a recent statement.

“Our business is built on delivering a superior experience and customers are increasingly choosing PillPack for their medication needs. While incumbent pharmacies may be disappointed in the loss of business, it is unacceptable to make unsubstantiated allegations about PillPack’s practices while also creating systemic barriers that make it harder for a customer to switch pharmacies.”

Accusations continue

New concerns have sprung up about pharmacy customers becoming PillPack customers, but not knowing there are transfer requests for their prescriptions.

People who appear to be or claim to be pharmacists have recently posted the same issues on sites like Reddit—claiming the patient did not know they were being signed up.

There has been no public statement of these concerns by the pharmacies.

But there are questions surrounding how PillPack got access to patient medication history that other pharmacies do not have access to. It’s another battle between an established industry, and Amazon’s attempt to disrupt it.

Reddit thread showing pharmacists discussing PillPack

PillPack operations

When someone signs up for PillPack, they are asked for information to verify the order, including their name, date of birth, medication, current pharmacy and the name of the health care provider who wrote the original prescription.

But sometimes, customers don’t know the exact name of their drug and refer to it as the medication they take for a specific condition. This can be a problem when, on average, PillPack customers take about seven different medications, according to the company site.

It’s one of the reasons behind why PillPack and ReMy Health forged a relationship. ReMy gets its information from Surescripts, the largest “clearinghouse” of patient medication history.

Through ReMy, PillPack was able to obtain the information to verify prescriptions, and the requests were being processed through a specific identification number of one provider.

ReMy provides hospitals and providers with patients’ medication history through its contract with Surescripts. So the relationship between ReMy and PillPack, according to Surescripts, may have been a breach of the contract between it and ReMy.

Yet PillPack’s spokesperson defended the company in a July statement, insisting that prescription history “is only requested upon consent of the customer, and that PillPack “is a covered entity (the same as a physician’s office), and is bound by all healthcare privacy laws, including HIPAA.”

Surescripts suspends ReMy

When Surescripts saw the unusual activity under that one identification number and asked ReMy about it, the company said it was using the information appropriately, Surescripts officials said in a recent statement.

But when Surescripts found out the end recipient was PillPack, it said ReMy broke the terms of its contract and terminated it, suspending the company from the Surescripts network. It added that it was turning the matter over to the FBI.

CVS and Express Scripts (CI), which recently merged with Cigna, are part owners of Surescripts. Even CVS, which is a PBM and pharmacy company, does not have access to the data PillPack obtained.

ReMy has since denied the allegations, insisting its actions were lawful.

An uncertain future

How all of this will affect the future of PillPack remains to be seen. It is currently in network with the major pharmacy benefits managers, which include Express Scripts and CVS. The company is licensed in 49 states for prescription delivery, with Hawaii the exception.

It relies on its own in-house platform to manage patients, which is what has given it a leg up in the online pharmacy world.

CVS has launched its own mail-order product, emulating PillPack’s focus on multiple medication users.

Anjalee Khemlani is a reporter at Yahoo Finance. Follow her on Twitter: @AnjKhem

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