Amazon Pharmacy first major public trust Prime test and expose the company to increased scrutiny: Amazon has launched its new Amazon Pharmacy service, which means the company will sell both prescription and generic drugs to its U.S. customers through its website.

The move wasn't unexpected; industry watchers have been waiting for Amazon to go into drug sales since 2018, when it acquired drug delivery service PillPack. The company has also been pushing for overall health care ever since.

However, Amazon Pharmacy is the first time consumers are likely to truly notice this effort by Jeff Bezos ' company for the healthcare industry, as Prime customers will reap significant benefits. Specifically, Amazon Prime members are guaranteed two-day delivery of all medications, plus discounts of up to 80% when they don't use insurance. Amazon will also allow them to compare whether it would be cheaper to buy drugs using the insurance co-payment or just rely on Amazon offers.

The move fits with Amazon's modus operandi of trying to be the go-to place for daily shopping and bringing customers to its Prime program. However, you will also have to be very careful not to scare Prime customers who might be concerned about the privacy of their data.

Analysis by consulting firm cg42 suggests that of the big tech companies, Amazon is the most reliable when it comes to the privacy of user data. Of the 1,500 people surveyed in July 2020, 42% say they trusted Amazon with their personal information. The next most reliable technology company was Google with 28%, while Facebook was in last place with 16%.

Amazon Pharmacy first major public trust Prime test

Stephen Beck, founder of cg42, points out to Business Insider that the launch of Amazon Prime in the healthcare sector has the potential to tip the scales in the eyes of Prime customers, who are used to accessing Amazon Prime to buy retail commodities and watch shows on its streaming service.

"It's going to be very interesting to see if this is going too far," Beck muses. Overall, he expects the cost benefits to outweigh the privacy concerns of the Prime subscriber, but Amazon will have to walk a very fine line to maintain public trust.

"But it's really the first time Amazon has entered a category where the consumer is going to stop thinking before moving," Beck warns.

"Buying a Halloween costume on Amazon, you don't worry about the implications of the data," he notes. "[Watching] 'the man in the castle,' again, you're not really worried. But your asthma medication? The truth is that you will think about it a little", he says.

To make people feel comfortable using Amazon Pharmacy, the company is also going to have to move away from its usual business model. Typically, Amazon uses user data about its customers to push them toward other purchases, pointing out items they might also want to buy. If you want to keep the trust in your pharmaceutical business intact, you will have to resist falling into the slot of your usual business model.

"Will the person who is taking high blood pressure medication be open to the blood pressure monitoring devices listed in their Amazon recommendation? That's going to look weird," Beck says.

Forrester analyst Arielle Trzcinski also assures in a blog that the recommendations of pharmacies could trip Amazon, although it could also present an opportunity.

"Data privacy concerns abound, but individuals are increasingly open to sharing data if given value in return. The data could give recommendations on low-sodium foods or training equipment for hypertensive clients," writes Trzcinski.

"At the end of the day, [Amazon pharmacy] means consumers will need to be comfortable with Amazon knowing even more about them and the 'creepy factor' can be hard to overcome," he adds.

Beck also believes Amazon Pharmacy will expose the company to increased government scrutiny over how it processes data.

"When you look at how they can assimilate information throughout an individual's life, it's a different dynamic, which I think will come under more scrutiny, especially since they've now entered the healthcare space and you have to start thinking about the HIPAA [Health Insurance Portability and Accountability] laws," he says.

Amazon is already under heavy scrutiny over how it collects data collection in its business model, with investigations underway in the US and EU. These investigations focus more on how Amazon uses data from third-party vendors, rather than how Amazon assimilates data about individual users.

In the press release announcing its pharmacy service, Amazon sought to allay any fears around privacy, saying it " securely handles customer information in compliance with HIPAA, and does not share protected health information outside of the pharmacy for advertising purposes without clear customer permission."

Time will tell if this is enough to reassure consumers, governments and privacy activists.

Amazon Pharmacy first major public trust Prime test

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