Amazon has won the rights to distribute pharmaceuticals wholesale in 12 U.S. states and is awaiting the decision on an application in a thirteenth, the St. Louis-Dispatch reported Thursday, citing public records. The announcement triggered a massive drop in the shares of pharmacy chains and drug wholesalers, with industry executives expressing alarm that the e-sales giant could use its vast market reach and logistical advantages to dominate traditional wholesalers and cut pricing deals with drug manufacturers.
“Size and scale-wise, they can disrupt anywhere they want to disrupt,” Chip Davis, president of the Association for Accessible Medicines, a trade group for generic medication, told Reuters.
The states that have granted Amazon licenses include Nevada, Arizona, North Dakota, Louisiana, Alabama, New Jersey, Michigan, Connecticut, Idaho, New Hampshire, Oregon, and Tennessee, according to the St. Louis-Dispatch. The newspaper said that Amazon also has an application pending in Maine. Its report did not indicate when Amazon might begin selling drugs in any of these states, however.
Rite Aid shares fell 5.6% Thursday afternoon following the news, while Walgreens Boots Alliance shares dropped 3.7% and McKesson Corp. fell by 3.4%. Amazon declined to comment. A company spokesman told Reuters only that Amazon does not comment on rumors or speculation.
Discussion about a possible Amazon foray into pharmaceutical sales emerged earlier this month when CNBC reported earlier that Amazon was seriously considering getting into the business of selling prescription drugs online. Leerink, a brokerage firm, told reporters that Amazon has been speaking with pharmacy benefit managers and has been closely assessing the drug retailing market and forming a strategy for entering it.