Pharmacies drop after Leerink says Amazon talking to PBMs

After speaking with management teams of AmerisourceBergen (ABC) and Cardinal Health (CAH), Leerink analyst David Larsen said in a research note earlier today that he was surprised to hear Amazon (AMZN) "may indeed be in conversations with some middle-market PBMs now, in an effort to get into various contract arrangements." PBMs, or pharmacy benefit managers, include Express Scripts (ESRX) and UnitedHealth (UNH). Amazon likely has the ability to go after "cash paying" customers now, and while this segment of the market may be just 5%-10% of total, it can still be material, Larsen wrote. He points out that when Walgreens Boots Alliance (WBA) captured 40M prescriptions from CVS, or less than 2% of total PBM and retail scripts, the unfavorable earnings impact was significant. In order for Amazon to be licensed in 50 states, Leerink's specialist thinks it would take 18-24 months to get all of the paperwork completed. The specialist, however, believes there would be minimal impact from Amazon on the PBMs. After Axios highlighted Larsen's research note in an afternoon post on its website, shares of pharmacy owners CVS Health and Walgreens fell around 2%. Express Scripts is up 1% to $61.89 in afternoon trading.