Amazon.com agreed to buy the online pharmacy start-up PillPack, jumping into the health care business with a deal that will give the retail giant an immediate nationwide drug network.
The move represents a formidable threat to pharmacy chains including Walgreens Boots Alliance, which earlier Thursday reported tepid U.S. same-store sales, and rival CVS Health Corp.
Terms of the deal weren’t disclosed. The transaction is expected to close in the second half of 2018, according to a statement from the companies.
The U.S. market for prescription medicine is huge. In 2016, U.S. consumers spent $328.6 billion on retail prescription drugs, according to the U.S. government.
CVS reported prescription sales of $59.5 billion last year, and Walgreens sold $57.8 billion worth of drugs in its fiscal 2017.
PillPack has mail-order pharmacy licenses in all 50 states, which could allow Amazon to expand quickly.
PillPack also has relationships with most major drug-benefit managers, including Express Scripts and CVS, and says it works with most Medicare Part D drug plans.
Those ties will give Amazon access to much of the prescription drug market in the United States.
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PillPack sells presorted packets of prescriptions drugs, delivering them to customers in their homes.
The closely held business has software that automates many routine pharmacy tasks, such as verifying when a refill is due, determining co-pays, and confirming insurance. That eliminates much of the manual work that pharmacists often are saddled with now.