Now, later or not at all? Amazon's (potential) move into meds spawns a slew of scenarios

Amid increasing chatter that Amazon is eyeing the pharmaceutical business, PBMs and other companies in the drug supply chain face the potential of a vicious new player looking to shake up the complex field.

But the threat is far from certain—and, even if Amazon decides to pursue it, could take years to come to fruition. That's why analysts have been poring over every shred of information about the potential Amazon move, presenting scenarios about when and how the company might approach drug distribution—and, potentially, with whom.

Bernstein analyst Lance Wilkes, for instance, believes the company will have its pharmacy business set up by 2019 and ready to compete for 2020 reimbursement talks, according to Benzinga. CNBC recently reported that the tech giant and retail category-killer plans to decide by Thanksgiving whether to pursue selling drugs online. And Leerink analyst David Larsen wrote last week that "it's a matter of when, not if" that Amazon will move into drugs, according to MarketWatch. 

Ana Gupte, a Leerink analyst, wrote on Friday that Amazon is in "active discussions" for PBM partnerships, throwing out Prime Therapeutics as one potential option, according to Bloomberg. A Prime spokesperson couldn't confirm whether the talks had occurred, according to the news service.

One sign that Amazon might make an entry into the drug business? The company has already built an internal PBM, CNBC reports, which could be an early step toward applying its capabilities in the larger market. A sort of pilot project, in fact.

On the other side of the coin, however, Amazon weighed an entry into the grocery industry for a decade, MarketWatch points out, citing Mizuho analyst Ann Hynes. That could be one reason to pump the brakes on speculation. Plus, as industry watchers know, the drug supply chain is an opaque and complicated channel with large and entrenched players, making it tough for new entrants to gain a foothold.

RELATED: Will Amazon really get into drug sales? It's in talks with PBMs already, report says 

Analysts have been speculating at length for months about a potential Amazon play in the drug business. Back in August, a group at Goldman Sachs wrote predicted that the tech giant would partner with an existing company in the supply chain as a "path of least resistance." Amazon could offer a strong user experience and a top-notch logistics network initially, while later working to improve price transparency in the pharmaceutical business, the firm noted. In September, Leerink Partners analysts published a report that Amazon was already in talks with PBMs.

As competitive threats mount to the drug-reimbursement gatekeepers, Raymond James' research team downgraded top pharmacy benefit manager Express Scripts to underperform from market perform on Monday. In its report, the group wrote that Express Scripts is "vulnerable to escalating competitive pressures given its pure play (undiversified) model and high relative margin profile."

Express Scripts' rivals in the PBM field such as CVS Caremark and OptumRx are pharmacy benefit management units of larger companies, in their cases CVS Health and UnitedHealthcare.

St. Louis-based Express Scripts disagrees with the assessment. In a statement, a spokesman said the "competition cited in the report are our normal competitive industry dynamics." 

"While we don’t comment on speculation, we would reiterate what we’ve said previously: our independent PBM model is strong, our innovative solutions are in demand and our ability to deliver cost-effective quality pharmacy care has never been more needed," he wrote via email.

Nonetheless, the downgrade spooked investors and Express Scripts shares were down 5% on Monday. Around the industry, the Amazon chatter has taken a toll on some PBM stocks and supply chain stocks as investors weigh the risks. But Express Scripts announced on Tuesday it's spending $3.6 billion to buy eviCore healthcare, which it says will advance its capabilities in patient benefit management.

As drug pricing pressure has heated up in recent years, pharmacy benefit managers have come under increasing scrutiny. That's partly a pharma effort: Drugmakers have pointed to PBMs as drivers of high prices because of demands for bigger rebates. Several drugmakers have released transparency reports demonstrating how growing rebates and discounts are hurting their ability to realize price hikes.

To hit back, PBMs maintain that their tough negotiating saves the U.S. healthcare system billions and that drug companies are always the ones who set prices.