When Amazon acquired the online pharmacy PillPack for $750 million one year ago, it sent shudders through the healthcare industry.
A new lawsuit gives the first inside look at Amazon's plan to disrupt incumbents.
PillPack is competing with CVS for a lucrative business, lawsuit alleges
PillPack packages medications by dosage for customers and mails them to their homes. That offering directly competes with CVS pharmacies.
But CVS also runs a lucrative business negotiating drug prices for US health plans through its business unit Caremark. The company alleges Amazon's PillPack is trying to go past this entirely by contracting directly with health plans.
PillPack has been "aggressively" approaching CVS Caremark clients, the company wrote in the court filing. It cited "direct discussions" with the health-plan federation Blue Cross Blue Shield to deliver prescriptions to the homes of its more than 100 million members.
Read more: CVS and Amazon's showdown is intensifying
"The inescapable conclusion is that Amazon-PillPack and CVS Caremark directly compete with comparable offerings to fill prescriptions for patients," CVS said in court filings. "And, given its robust infrastructure, operational capacity, and distribution reach, Amazon-PillPack is uniquely positioned to negotiate directly with Payers and displace CVS Caremark's mail based services."
"In fact, CVS Caremark has already received feedback that clients are considering AmazonPillPack as an alternative to CVS Caremark's mail-based services," the pharmacy chain added.
The lawsuit is being brought against a former CVS executive, John Lavin, who had worked at Caremark for 27 years before giving notice to join PillPack in April. CVS is suing in hopes of enforcing a noncompete that would prevent Lavin from disclosing confidential information.
PillPack says on its website that it offers services for health insurers to help high-risk patient populations take their medications as prescribed, though it doesn't go into further detail.
The company has also worked with the health insurer Aetna since early 2017, before the Amazon acquisition. The partnership allows members of the government program Medicare to fill prescriptions through PillPack at no extra cost.
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