CEO SUMMARY: In the past year, internet retailing giant Amazon has built sizeable clinical laboratories in the United States and the United Kingdom. Now it has regulatory clearance to sell a molecular COVID-19 test to consumers for home collection. Comments made in the past month by an Amazon spokesperson describe Amazon’s diagnostic testing activities as “large scale” and as “creating new testing capacity at no cost to the healthcare system.”
RECENT ACTIONS BY AMAZON, the world’s largest internet retailer, indicate that it is serious about offering clinical laboratory services to consumers. The company just obtained regulatory clearance for a direct-to-consumer molecular SARS-CoV-2 test kit designed for at-home collection by the customer.
Several news outlets reported that the Food and Drug Administration (FDA) had issued an emergency use authorization (EUA) on May 28, 2021, for the “Amazon Real-Time RT-PCR DTC Test for Detecting SARS-CoV-2.” The test was developed by STS Lab Holdco (a subsidiary of Amazon.com Services LLC).
In a story about Amazon’s plans for diagnostic testing, Business Insider wrote “‘Amazon decided early on during the pandemic that COVID-19 testing would be a critical tool to ensure the health and safety of front-line employees,’ an [Amazon] spokesperson told Insider. ‘Since then, we have been working closely with the FDA to build and enable large-scale testing capacity using a state-of-the-art lab we built from scratch—creating new testing capacity at no cost to the healthcare system. We continue to innovate to support the safety of our employees, their families, and the communities where they live,’ the spokesperson continued.”
This declarative statement should get the attention of clinical laboratory administrators and pathologists. It is public acknowledgement that Amazon is on a path to provide diagnostic tests. It already has the market reach to sell lab tests directly to consumers, which is what it intends to do with its new COVID-19 test.
Amazon’s Unique Capability
But Amazon also has a unique capability that would immediately make it a tough competitor in the market for clinical laboratory tests originating in doctors’ offices. It has a first-class distribution network already in place that covers nearly the entire United States and could be used to pick up lab specimens from medical clinics.
The ubiquitous Amazon Prime vans are regularly visible in business and residental neighborhoods throughout the nation. Also, these vans deliver during the evenings and on weekends. It would not take much for Amazon to add lab specimen pickups to its existing delivery network.
That idea was reinforced by Nathan Ray, a director in the healthcare and life sciences practice at business and technology consulting firm West Monroe. Ray told FierceHealthcare, “Labs are a particularly good fit for the core strengths of Amazon. Distribution and supply chain, scale and cost advantage, and digital customer and patient engagement are all pointed at reducing friction and likely ultimately improving use and access frequency.”
Amazon Builds Big Lab
In May, 2021, The Dark Report published an intelligence briefing on Amazon’s construction of clinical laboratory facilities scaled to provide COVID-19 tests for the company’s one million employees.
At that time, we said it was unlikely that Amazon would invest substantial capital to build one or more high-volume, highly-automated core laboratories and close those facilities once the pandemic had ended. Rather, these large clinical labs would end up doing regular lab testing.
Initially, that post-pandemic testing would probably be for the clinical needs of its employees covered by the Amazon health plan. But it would be easy to offer diagnostic testing services directly to office-based physicians, hospitals, skilled nursing homes, and other medical providers. (See TDR, “Amazon Building Labs to Do COVID-19 Testing,” August 3, 2020.)
Employees First, Then Market
Michael Abrams, a managing partner at consulting firm Numerof & Associates, agrees with the progression of first providing health services to Amazon employees, before then offering the same services to the wider market.
“When Amazon puts a lot of money into something that has potential in the healthcare marketplace, they try it out with their employees and, if it works well, they take it public,” he told FierceHealthcare.
To illustrate that point, he described how Amazon Care, a primary care service, was launched for the company’s employees and is now being sold to other companies as an employee benefit they can provide to their staffs.
Abrams went further and predicted Amazon could use lab test data in an entirely different service it could sell to employers. “There is the potential [for Amazon] to help employers receive better population-level information on their entire workforce, including those that do not frequently engage with the health system,” he told FierceHealthcare. “It could also be an interesting market for new diagnostic test providers and even for your own physician to more easily and regularly order testing [from the Amazon website].”
Abram’s comments above are consistent with the Clinical Lab 2.0 model, which calls for clinical laboratories to move beyond simply reporting an accurate test result within the target turnaround time (Clinical Lab 1.0). Instead, innovative labs should integrate lab test data with other clinical, demographic, and geographical data to provide actionable clinical intelligence that informs patient care at the micro level and guides population health initiatives at the macro level. (See TDR, “CEO Describes Characteristics of the Clinical Lab 2.0 Model,” May 15, 2017.)
Amazon’s Diagnostics Play
The information provided here and in the sidebar below shows that Amazon recognizes the importance of diagnostic testing as a cornerstone of almost every aspect of healthcare. The company is in the midst of a multi-year effort to assemble the skills, capabilities, and infrastructure required to provide clinical laboratory testing directly to hospitals, physicians, and other providers while also providing access to tests to consumers.
It may be timely for lab administrators, pathologists, in vitro diagnostics (IVD) companies, and lab informatics companies to view Amazon as more than just a new competitor in the healthcare marketplace. Amazon could start sending sales reps to hospitals and doctors’ offices to win their lab test referrals and build market share. This would create a total vertical disruption to the healthcare industry, just as Apple did to the CD/Vinyl music industry with its iPod streaming music device.
In 2018, Amazon Considered Acquiring a Consumer Home-Test Diagnostics Company
NEWS ACCOUNTS GOING BACK TO 2018 have reported Amazon’s interest in offering diagnostic tests to consumers for use at home. For example, at the end of 2018, it was reported that Amazon had considered acquiring Confer Health, a start-up company in Boston working to develop diagnostic tests that can produce clinical-grade results at home.
At that time, CNBC covered this development in detail, describing several projects at Amazon involving diagnostics. CNBC interviewed analysts about Amazon’s interest in healthcare and diagnostic testing, writing that, “medical diagnostics experts say that Amazon is uniquely positioned to succeed in the healthcare space, where many start-ups have struggled.”
CNBC added, “If Amazon moves ahead, ‘the notion of being able to connect consumers to a health testing product that sits in the home, as well as delivering treatments, would be quite revolutionary,’ said Greg Yap, a tech-driven life sciences investor with Menlo Ventures, who does not have direct knowledge of Amazon’s plans.”
What is interesting is how Yap connected several Amazon products in ways that would make Amazon a viable provider of a full range of healthcare services. CNBC wrote, “Yap said there are a lot of potential hurdles, including regulations that require a physician to interpret the results.” Other analysts say Amazon’s use of telemedicine might help resolve that issue by giving it access to physicians who could order tests and review the results remotely, using a smartphone or a laptop. Prescriptions could also be handled in this same way.
In this story, Yap called attention the fact that Amazon’s Alexa voice assistant was already used in more than 40-million people’s homes. He thought Amazon could leverage that ability to connect physicians and patients, including the reporting of diagnostic test results.
Recently, FierceHealthcare reported that Amazon’s launch of its Amazon Halo Fitness Tracker in 2020 gives it another way to integrate and support a consumer’s or patient’s access to healthcare. It interviewed Michael Abrams, a managing partner at consulting firm Numerof & Associates.
Synergistic Opportunities
Abrams told FierceHealthcare, “The Halo device can monitor the vitals of someone with a chronic disease. Alexa can then remind them that it’s time to make an appointment, they can do a virtual visit, and also get a test kit in the mail for lab testing … Amazon Care is synergistic with Amazon Pharmacy and both of them would be synergistic with a diagnostics line of business as well.”
These developments are signs that Amazon is moving forward with an ambitious and comprehensive plan to disrupt healthcare. Given the essential role of clinical laboratory testing for diagnosis, guiding selection of therapies, and monitoring patients, it is reasonable to assume that Amazon’s forward steps to build its own CLIA-certified laboratory and obtain an EUA for the COVID-19 test it now sells to consumers are key parts of its goal to expand into healthcare.
