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… Jaguars weigh up to 250 pounds; the largest known population exists in the Amazon Rain Forest…

John G. Baresky

How may a Federal Trade Commission antitrust lawsuit filed in April 2019 against Surescripts be a factor?

Amazon (NASDAQ: AMZN ) and its online pharmacy unit, PillPack, have a significant challenge. On the surface, it appears to involve only a small, Iowa-based healthcare and prescription data technology company, ReMyHealth, but drastically scales up and potentially involves some of the largest retail and mail order pharmacy, MCO / PBMs and pharmacy associations in the nation — and a somewhat ambiguous organization known as Surescripts.

Amazon / PillPack and ReMyHealth…

PillPack had a contract with ReMyHealth to access patient medication history and other data which PillPack uses to better manage prescriptions for its patients. Founded in 2013 and based in Des Moines, Iowa, ReMyHealth develops data solutions and services that automate a series of processes involving prescription drug claims, patient insurance eligibility verification, prior authorization and other exchanges of healthcare data.

ReMyHealth and Surescripts…

ReMyHealth sourced prescription data from Surescripts. Founded in 2001 and based in Arlington, Virginia, SureScripts is a healthcare information technology organization that works with e-prescribing, pharmacy claims processing data between healthcare organizations (providers, payers) and pharmacies plus other medical record data transactions. ReMyHealth depended on SureScripts to provide it with access to patient medication history so it could provide services to Amazon’s PillPack. Surescripts terminated their contract with ReMyHealth as they assert ReMyHealth improperly shared data outside of the terms of their contract.

Who and what is Surescripts?

The healthcare industry and prescription drug marketplace are a competitive, complex environment with a myriad of clinical, financial and technical processes facilitated by an array of different organizations. Surescripts is privately-held and although it was formed in 2001, its ownership, for the most part, has an older pedigree:

  • Express Scripts ( owned by Cigna ) started up in 1986, Cigna began in 1792
  • National Association of Chain Drug Stores ( NACDS ) was founded in 1933
  • National Community Pharmacists Association ( NCPA ) began in 1898

PillPack’s Success…

Prior to being acquired by Amazon, PillPack had contracts in place with many managed care organizations, PBMs and other entities to be a providing pharmacy in their networks. PillPack’s success in building market access early as an integral part of their business model was just one of the reasons Amazon was impressed enough to acquire them. PillPack had lined up these and other entities in their contracting:

  • CastiaRX
  • Cigna ( Cigna owns Express Scripts )
  • CVS Caremark ( a Surescripts stakeholder)
  • EnvisionRx
  • Express Scripts ( a Surescripts stakeholder )
  • Humana Pharmacy Solutions ( a Surescripts stakeholder )
  • MedImpact
  • OptumRx
  • Prime Therapeutics

A New Competitive Threat Emerges…

Now that PillPack is owned by Amazon, a new and more substantial competitive threat has emerged. PillPack is no longer just one of many lesser-scale pharmacies eligible to fill prescriptions for the programs of the customers they have contracted with. As a unit of Amazon, they bring a whole new dimension in scope and scale to this picture as Amazon has been very successful in disrupting long-established market sectors, scaling up service, capturing market share and generating income.

The Controversy Unfolds…

Was the alleged breach of contract by ReMyHealth a bonafide violation of the agreement between ReMyHealth and Surescripts or was it potentially overblown by Surescripts (and their ownership) as a way to slow down Amazon’s advance into healthcare and PillPack’s growth?

The Federal Trade Commission And Surescripts…

Prior to the present issue between Amazon / PillPack, ReMyHealth and Surescripts, the Federal Trade Commission filed suit against Surescripts on April 17, 2019. The Federal Trade Commission ( FTC ) sued Surescripts by alleging the company employed illegal vertical and horizontal restraints in order to maintain monopolies over two electronic prescribing, or “e-prescribing,” markets: routing and eligibility.

Bureau of Competition Director Bruce Hoffman weighed in with these comments…

“For the past decade, Surescripts has used a series of anticompetitive contracts throughout the e-prescribing industry to eliminate competition and keep out competitors. Surescripts’s illegal contracts denied customers and, ultimately, patients, the benefits of competition — including lower prices, increased output, thriving innovation, higher quality and more customer choice. Through this litigation, we hope to eliminate the anticompetitive conduct, open the relevant markets to competition, and redress the harm that Surescripts’s conduct has caused.”

According to the complaint, Surescripts monopolized two separate markets for e-prescription services:

  • The market for determining eligibility, a separate service that enables health care providers to electronically determine patients’ eligibility for prescription coverage through access to insurance coverage and benefits information, usually through a pharmacy benefit manager

Complete Details Are Contained In This FTC Press Release…

Federal Trade Commission Charges Surescripts With Illegal Monopolization of E-Prescription

Surescripts’ Market Dominance…

It is not surprising the FTC has taken notice of Surescripts’ overwhelmingly controlling position. The rate of growth and volume they have accumulated is impressive but also concerning. Based on these and other touchpoints, how can one entity lockdown so much business considering:

  • Multiple tech heavy hitters in the healthcare, data technology and claims processing space: Accurence, Agero, Amazon, Apache, Apple, Arista, athenahealth, Cisco, Conifer, Convergent, Dell / EMC, Equifax, Experian, Google, HP, HRG, JDI, Merriman, Microsoft, Napersoft, Octo, Oracle, Origami, Plexis, SAP, SAS, Teradata, The Shams Group, TransUnion, Virtual Benefits Administrator, VMWare and many more…
  • The growing demand for interoperability and accelerated data sharing between patients, providers, payers and other stakeholders to lower costs and improve access to healthcare data not only for patient services but medical research and other purposes as well

Amazon And PillPack Have Options…

Clearly Amazon and PillPack have a serious situation on their hands but Amazon is not a company to be trifled with. They have extraordinary financial, technical and operational resources to rally with and PillPack is a compact business unit that can be given ample additional support while being nimbly steered through these circumstances.

  • Mirror the solutions and services ReMyHealth provides by building their own capabilities and contracting directly with Surescripts
  • Lean on ReMyHealth and Surescripts to reinstate the contract at least until they ( Amazon ) can devise a plan to move forward without ReMyHealth
  • Take full-on legal action on their own behalf against ReMyHealth and more productively speaking, Surescripts
  • Choose innovation to circumvent conventional arrangements in place between Surescripts / Surescript ownership to develop a new data-sharing arrangement or an entirely new business model of prescription information sharing, patient support and new business generation

Considering these relationships, PillPack’s attributes and Amazon’s resources, no one would be surprised if they developed a novel strategy and technology solution to this issue but competitors would certainly be disappointed.

Questions Remaining…

Looking ahead, a lot of new developments will manifest themselves based on the outcome of these and other questions:

  • How will Surescripts fare in litigation proceedings filed against them by the FTC?
  • How legitimate, egregious were ReMyHealth’s alleged contract violations with Surescripts; how may the FBI proceed with them and what recourse do they have if they can’t successfully defend their position?
  • How closely does Surescripts enforce the standards they applied towards ReMyHealth to the rest of their clients?
  • How will Amazon / PillPack resolve this issue and outdistance it moving forward?
  • What firms will seize the opportunity to work with Amazon / PillPack in their hour of need?
  • How may Amazon’s new employee health program, Amazon Care, be a catalyst for change in these circumstances?

Moving forward…

An election year is approaching; healthcare costs and commercial practices are a hot political topic. Many stakeholders, including political, consumer, patient, employer, MCO, PBM, pharmacy, the investor community and others will be scrutinizing the litigation proceedings between the FTC and Surescripts. Compared to other entities like pharmaceutical manufacturers, GPOs, PBMs and MCOs; as an organization, Surescripts has been able to operate in relative obscurity for years. This will rapidly change once things are underway in the courtroom.

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Authentic, fact-based healthcare content marketing writing for medical, business, academic and consumer audiences

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