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As Amazon eyes healthcare disruption, peers consider partnerships with retailer

Retail behemoth Amazon.com Inc. continues to shake up the healthcare world by leaving one venture and launching a new one, leaving some industry CEOs determined to work with — not against — the disruptor.

Amazon's exit from the Haven joint venture announced Jan. 4 seemed to experts a way for the retailer to prioritize its much grander healthcare plans to revolutionize the delivery of drugs. The Amazon Pharmacy platform — launched in November 2020 — is the company's effort to do so, allowing users to browse and purchase medications online and have them shipped to their homes. But Amazon's Haven exit also showed just how hard the healthcare industry is to disrupt in the first place.

"Don't underestimate the other values that consumers get out of going to a pharmacy and the enjoyment they actually get out of that retail environment. I think it's much harder to disrupt than people thought at first glance," said GoodRx Holdings Inc. CEO Doug Hirsch at the 39th annual J.P. Morgan Healthcare Conference.

Executives like Cigna Corp. CEO David Cordani and others see a role for Amazon to play and value that can be derived from partnerships.

"We think it's a bad philosophy ... in a dynamic market to actually close the door on the potential to collaborate or partner with so many different parties that may exist because they are or may be competitors," Cordani said.

While mail-order pharmaceuticals are key to Cigna's subsidiary Evernorth Health Inc., the company struck an agreement between Evernorth unit InsideRx and Amazon Pharmacy so that users can save money on prescriptions via a savings card.

Cordani said his company is open to collaborating with so-called competitors as long as the collaboration creates shared value. The CEO recognized that managed care provider Cigna will need to continue to innovate, and more collaborations with Amazon could be in the future.

GoodRx similarly has a working relationship with Amazon, as customers can use prescription coupons at the retailer's subsidiary PillPack Inc. Hirsch brushed off suggestions that Amazon Pharmacy could truly threaten GoodRx's business at J.P. Morgan, but the company nevertheless responded to the announcement of Amazon Pharmacy by adding new capabilities to the GoodRx Gold membership program including at-home deliveries for prescriptions.

'A data problem'

Amazon's larger healthcare ambitions may have contributed, in part, to the downfall of the Haven venture with Berkshire Hathaway Inc. and JPMorgan Chase & Co.

HealthVerity Inc. CEO Andrew Kress said during a digital health panel at the J.P. Morgan conference that perceived competition drove a wedge in the member companies' efforts.

"It was partially a data problem and partially a commitment problem," Kress said.

Haven's goal was to make healthcare more transparent and easier for employees of the three member companies. But Kress said the effort was ultimately unsuccessful as the companies were unable to get their hands on data that could have helped them accomplish this goal. The venture's companies were also unable to find "relevance."

This inability to set aside competitive differences could be a challenge to the pledges of CEOs like Hirsch and Cordani who say they would like to work with rather than against Amazon, according to Kress.

"It's not necessarily a technical problem that data can't be shared," Kress said, "It's that the parties just don't want to share the data because there is still a lot of competitive inertia that sort of keeps things siloed."

The J.P. Morgan Healthcare Conference brings together about 600 presenting companies and almost 13,000 attendees. The 39th annual conference in 2021 was held virtually to curb the rate of infection of the COVID-19 virus.