Tags: jim cramer | amazon | jpmorgan | berkshire

Jim Cramer: Amazon-Berkshire-JPMorgan Health Venture to Cut Drug Middlemen

By    |   Tuesday, 13 February 2018 01:31 PM

Jim Cramer, the former hedge-fund manager and markets commentator on CNBC, said a healthcare venture being set up by Amazon, Berkshire Hathaway and JPMorgan Chase seeks to save money by cutting out drug distributors. He cited people familiar with the plans.

Eliminating middlemen from pharmaceutical distribution could squeeze companies like Amerisource, Cardinal Health and McKesson, he said.

Amazon, Berkshire Hathaway and JPMorgan last month announced plans to form a healthcare company aimed at cutting costs for their more than 500,000 U.S. employees.  

“The ballooning costs of healthcare act as a hungry tapeworm on the American economy,” Warren Buffett, chairman and chief executive officer of Berkshire Hathaway, said at the time. “Our group does not come to this problem with answers. But we also do not accept it as inevitable.”

Amazon, led by chairman and CEO Jeff Bezos, has a history of wringing costs out of supply chains, making a fierce competitor in the retail industry.

"Jeff Bezos believes he can lower the price of health care," Cramer said on CNBC. "He can become even more dominant and really eviscerate some of the competitors."

The healthcare partnership may mean trouble for a closer alliance between Walgreens Boots Alliance and AmerisourceBergen, Cramer said. The Wall Street Journal on Monday reported that Walgreens approached Amerisource about buying the three-quarters of the firm it doesn't already own.

"[Walgreens] may not be as smart as they think they are" considering Amerisource, Cramer said. "These companies are going to be squeezed by that [Bezos] venture and squeezed by others that have to compete."

JPMorgan, led by chairman and CEO Jamie Dimon, uses UnitedHealth Group and Cigna for health benefits for its global workforce, according to ISI Evercore analyst Ross Muken. Amazon uses Premera Blue Cross, part of the Blue Cross Blue Shield network, he said. Express Scripts, the pharmacy benefits manager, has disclosed it manages pharmacy benefits for Amazon.

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Jim Cramer, the former hedge-fund manager who hosts "Mad Money" on CNBC, said a healthcare venture being set up by Amazon, Berkshire Hathaway and JPMorgan Chase seeks to save money by cutting out drug distributors. He cited people familiar with the plans.Eliminating...
jim cramer, amazon, jpmorgan, berkshire
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2018-31-13
Tuesday, 13 February 2018 01:31 PM
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