In the world of large out-of-pocket patient and family health benefit annual deductibles for AB rated generics and oral solid dosage drugs, the opportunity to clean the clocks of the PBM captive mail order pharmacies by simply giving people real time access to cost information is both very real and enormous. The largely cash verterinary pharmacy business is also ripe for disruption.
Specialty pharmacy and home health are several times more complicated but again, with an acquisition, no problem. In todays world of horizontally integrated wholesalers and PBMs that functionally are indistinguishable from one another, the opportunities are at the retail, wholesale and distributor levels in the supply chain.
The current market players take large fees from manufacturers and do not pass through all manufacturers discounts to payers, so the value proposition Amazon could offer the supply chain and payer (patient, unions, employers, health plans for ASO/non-risk books of business) through efficient pricing transparency is both significant and material to their stock valuation as well as to that of the moribund PBM and wholesaler entites which will be disrupted.
These large dominant wholesalers and PBMs like to talk up the barriers to entry to Wall Street in order to preserve their own market cap, but the reality is that any TPA with a pharmacy license can operate a PBM and the clinical software used by PBMs is not what I would call Silicon Valley's most recent or best iteration of clinical algorithms and heuristics. Additionally the delivery time service offered by most mail order pharmacies is dreadful and turn-a-round times can be as long as 10 days or more if they do not lose the faxed or eprescribed script altogether.
Starting from scratch is actually a huge advantage as Amazon would not be hamstrung with a dysfunctional collection of legacy systems from prior acquisitions which do not share a common back end table architecture and data dictionary
Most PBMs long ago outsourced IT to reduce labor costs and therefore despite ongoing acquisitions which they tell Wall Stree they have integrated, they have in fact not integrated their hodge podge of disparate systems and data bases such that their processes which they claim afford them ecnonomies of scale are rather largely manual work arounds by and among multiple systems. Moreover, many of the systems are no longer adequately supported and code writers hired overseas or from overseas US based affiliates for government contracts do not understand the myriad of regulatory, operational and clinical requirements associated with US healthcare at the state and federal level.
As PBMs have been loathe to invest profits in updating IT infrastructure, the result is that a new player starting from scratch with intelligently designed and state of the art systems could eat their lunches fairly quickly as in one 3 year underwriting cycle or less.

Very - barriers to entry are easily overcome with distribution centers around the country for dispensing. They have the personnel already hired. The question becomes how motivated are they and will their dog-eat-dog corporate culture chase out the mature professional PBM talent they brought in-house before they stand it up.

Amazons' initial focus likely to be supply chain disruption, their special expertise accomplished in other sectors. Its easy to replicate PBM functions and functionality but not certain that all PBM functions are worthwhile nor create the value necessary to enter that space.
Nonetheless, this stirs the pot and creates more uncertainity for manufacturers short & long term.

Agree with the focus on supply chain disruption. I've actually ordered things on a Sunday and received them the next morning- even items I can't find locally.

Very easy for Amazon to do that if they wanted, but initial focus likely to be supply chain disruption.

Amazons' continues a quiet period and little is known about their true intentions.
Nonetheless, market values of traditional PBMs suffer, some are struggling to survive and transform their business practices fast, and others are unsure as what to do--if anything. Its a sad state of business affairs since purchasers have not taken leadership on anything to force change. Others like Amazon are determining needs from non-traditional means and players that likely will be transformative along with disruptive in the short run.

I was recently invited into a panel discussion on PBMs and we discussed PBM struggles. Indeed today, PBMs are focusing on reshifting their value proposition with an intent to demonstrate real transparency on their earnings, contracts, and claims data, among key initiatives they are being scritinized over. Amazon has potential to break into PBM space. However, they need to align their vision accordingly first. With their evidence objectives narrowed on supply chain, they may position themselves as able to deliver more price transparency for their customers — a quality which is lacking from PBMs today.

PBMs along with health plans have to create then demonstrate a new value proposition to the marketplace. Quality alone will no longer cut it, and neither of those entities are in a position to best impact quality directly.
Purchasers of care, employers & CMS, will relentlessly drive change now due to the unsustainable economic trends in the cost of care that have not delivered quality or clear value proposition to-date.