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Amazon Challenges Walgreens and CVS Health Again

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Amazon not done shaking up the pharmacy space

Amazon (AMZN) recently began letting customers use funds in their special healthcare savings account to pay for purchases of eligible products on its marketplace, the company confirmed to CNBC. Specifically, Amazon is letting customers use their HSA[1.health savings account] and FSA[2.flexible spending account] debit cards to settle payments for drugs or medical devices purchased on its marketplace.

HSAs and FSAs hold funds that people set aside from their before-tax salary to cover out-of-pocket medical expenses. Accepting HSA and FSA payments is viewed as part of Amazon’s pursuit of healthcare dollars. Last year, Amazon acquired online pharmacy startup PillPack to challenge drugstore chains Walgreens Boots Alliance (WBA), CVS Health (CVS), and Rite Aid (RAD), whose stocks fell on news of the acquisition.

A $333 billion opportunity

Amazon’s acceptance of HSA and FSA payments could also be seen as a warning shot for Walmart (WMT), which also accepts HSA and FSA debit card payments through its online pharmacy. The US retail prescription drug market, worth more than $333 billion in 2017, is part of the revenue opportunity Amazon is pursuing with its PillPack acquisition and move to accept HSA and FSA payments. Amazon generated revenue of $232.9 billion last year.

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