U.S. Markets closed

CNBC: Retail Pharmacies More Worried About Amazon Than They Admit

Jayson Derrick

Are traditional retail pharmacies and insurance companies worried about Amazon.com, Inc. (NASDAQ: AMZN)'s push into their respective territories?

Public comments from management teams brush off any concerns, but actions taking place behind the scenes may suggest otherwise, according to CNBC.

What Happened

CVS Health Corp (NYSE: CVS) initiated a lawsuit against a former senior vice president in charge of its retail pharmacy network in April, and UnitedHealth Group Inc (NYSE: UNH) sued one of its employees. Both lawsuits have one common denominator: both employees were leaving their respective companies to join Amazon, CNBC said in a Thursday story. 

CVS sued former employee John Lavin, who was hoping to take a new job at Amazon's pharmacy business PillPack; a judge ruled in favor of CVS, blocking Lavin from making the jump immediately.

The UnitedHealth lawsuit involved an employee who was looking to join Amazon's joint employer health venture, Haven.

Why It's Important

In CVS' case, the company argued in its lawsuit that Amazon is "uniquely positioned to negotiate directly with payers (insurers) and displace CVS Caremark's email-based services."

The lawsuit suggests pharmacy benefit managers are "at risk of being disintermediated," CNBC quoted Jefferies' analyst Brian Tanquilut as saying.

Stephen Buck, a drug supply chain expert, told CNBC that pharmacy benefit managers are going to be "more protective" than ever of their mail pharmacy businesses and "less welcoming" to outsiders such as PillPack. 

What's Next

CVS said in a statement obtained by CNBC that it is not looking to stifle competition, as there is "always room for new players in health care."

Competition will "help lower overall costs for payers and patients," the company said. 

"We remain focused on delivering innovative solutions to transform the health care experience." 

CVS shares were down 0.95% at $53.35 at the time of publication Friday. 

Related Links:

3 Ways Amazon Could Transform Health Care

Analyst: Amazon's Entry Into Pharmacy Sector Isn't As Lucrative As Many Assume

See more from Benzinga

© 2019 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.