Investors in the sector expect Amazon will become a major disruptor of healthcare, just as it has done in the retail industry, fueled by media reports in recent months that the company was considering entering the pharmacy business.
Teaming up with JPMorgan, the biggest U.S. bank, and Berkshire, the third-largest public company globally and an insurance provider, offers new opportunities to shake up the industry, analysts said.
For example, JPMorgan could help shape new payment models for consumers and providers, and provide cost data. CEO Dimon has for years expressed concerns about rising healthcare costs.
The bank has said it spent $1.25 billion on U.S. medical benefits last year, 2% of companywide expenses.
Buffett has long complained that high healthcare costs were hurting American businesses, and publicly began using the term tapeworm to describe their effects as early as 2010.
In September 2016, an investment officer for Buffett, Todd Combs, joined JPMorgan’s board of directors, and began seeing Dimon regularly. Combs will help lead the new entity, along with JPMorgan managing director Marvelle Berchtold and Amazon Senior Vice President Beth Galetti, the companies said.
Insurers Fall
Health insurers that provide benefit management or health plans to Amazon, JPMorgan and Berkshire could be among the hardest hit.
JPMorgan uses UnitedHealth Group Inc. and Cigna Corp. for health benefits for its global workforce, according to ISI Evercore analyst Ross Muken. Neither company was available for comment.
Amazon uses Premera Blue Cross, part of the Blue Cross Blue Shield network, according to Muken. Express Scripts, the pharmacy benefits manager, has disclosed it manages pharmacy benefits for Amazon.
Shares of UnitedHealth Group Inc., Cigna Corp. and health insurer Anthem Inc. were 4% to 7.2% lower at the close.
Drugstore operators CVS and Walgreen Boots Alliance, as well as Express Scripts, closed between 3% and 5.2% lower. Drug distributors Cardinal Health, AmerisourceBergen Corp and McKesson Corp were off 1% to 3%. Amazon closed up 1.4%.
