9 ms·

Pharmacy Startup PillPack Could Change the Way America Takes Its Medicine

62 points by JrobertsHstaff 12y ago

refurb 12y ago
This start-up is a great example as to why it's important to understand who the players are that deliver healthcare in the US. You have the insurance companies that pay the costs (drug and non-drug). However, many insurance companies partner with PBMs (pharmacy benefit managers) and let them handle all of the processing (for a fee). Guess who one of the biggest PBMs are? CVS Caremark. Yes, the same CVS as the retail pharmacies. If this product is going to work, it needs to figure out how to create an incentive for the existing players to get involved. If you look at your drug benefit card, it likely has a list of "preferred pharmacies". Go there and you pay less, go somewhere else and pay more. The PBMs control where you get the best deal. And yes, it's typically at their own pharmacies (e.g. CVS). If this company were to approach a retail pharmacy with their idea, I'll bet the pharmacy says "no". Retail pharmacies already have contracts with PBMs/insurance companies that pays them a certain fee for dispensing. A retail pharmacy would likely lose money if they had this company repackage a prescription. The only way to make this attractive to the retail pharmacy is to make sure they either make the same or more money. That's up to the PBMs/insurers. So if you take a step back and think about what drivers insurance companies, it's all about cost. Not just dollars, but improved outcomes for patients since that lowers costs as well. Compliance (taking the right drug at the right time) is a huge issue in terms of drug costs. An insurance company might plop down $5K for a prescription. The patient may only take 3/4 of the doses and end up no better. That $5K was a waste. Asthma is a great example. Insurers are more than happy to pay $300/month for a drug that reduces ER visits. One ER visit can cost $1000K. Now prove to an insurer/PBM that this type of packaging saves more than it costs (e.g. improved compliance) and they will come knocking on your door. This of course entirely ignores the issue of drug distribution. There are some huge players out there and this company needs to figure out how to insert itself between the company that sends the drugs to the pharmacy and the pharmacy itself. I'll leave that for another time.
- angersock 12y ago
  If this product is going to work, it needs to figure out how to create an incentive for the existing players to get involved. I agree with your writeup, but I'd like to call this out in particular: What if all the existing players are the source of the problem? That's the real trouble facing startups in healthcare: everyone wants to partner with the existing players, but they're all basically profiteering bastards.
  - toomuchtodo 12y ago
    > everyone wants to partner with the existing players, but they're all basically profiteering bastards. I was thinking this while reading refurb's comment and pleasantly surprised to get down to yours where its explicitly called out.
    - refurb 12y ago
      I guess it depends on how you define "profiteering". The drug distribution business has many competitors and margins are razor thin (think <2%). PBMs are also pretty competitive and I don't think they make a ton of money either. As for insurance companies, the ACA put limits on profit.
      - angersock 12y ago
        And yet Aetna does pretty well for itself: http://www.google.com/finance?q=NYSE%3AAET&ei=yIswVam_LOuJsge4_YHQBw http://www.google.com/finance?q=NYSE%3AAET&ei=yIswVam_LOuJsg... So does Humana: http://www.google.com/finance?q=NYSE%3AHUM&ei=44swVcjiAcSGsgfL5oCgCg http://www.google.com/finance?q=NYSE%3AHUM&ei=44swVcjiAcSGsg... And Anthem: http://www.google.com/finance?q=NYSE%3AANTM&ei=OIwwVYr5OIWDsQfltYGoAQ http://www.google.com/finance?q=NYSE%3AANTM&ei=OIwwVYr5OIWDs... And Pfizer: http://www.google.com/finance?q=NYSE%3APFE&ei=uYwwVeG2DezwsQfMhoCAAw http://www.google.com/finance?q=NYSE%3APFE&ei=uYwwVeG2DezwsQ... And Bayer: http://www.google.com/finance?q=ETR%3ABAYN&ei=Fo0wVcmsE6qysQfk84DoCg http://www.google.com/finance?q=ETR%3ABAYN&ei=Fo0wVcmsE6qysQ... And that's without even getting started on the corruption of equipment purchasing: http://www.washingtonmonthly.com/features/2010/1007.blake.html http://www.washingtonmonthly.com/features/2010/1007.blake.ht... Or the FDA: http://www.forbes.com/sites/davidmaris/2012/10/10/fda-recall-points-to-serious-problems-at-the-fda/ http://www.forbes.com/sites/davidmaris/2012/10/10/fda-recall... Or even the physician trade union itself: http://seattlepostglobe.org/2011/03/07/warnings-of-doctor-shortage-go-unheeded/ http://seattlepostglobe.org/2011/03/07/warnings-of-doctor-sh... (note that the govt. measure causing the shortage of residency slots was supported by the physicians themselves--only to later recant after the damage had been done) There are some players who have a hard time making an obnoxious profit, sure, but let's not pretend that's the general case. Those shiny new hospitals going up in your local medical center? That money isn't there because healthcare is so affordable and easy to get.
patmcc 12y ago
So simple, but such an improvement over the current system. Excellent idea. I just looked up how many people are taking prescription drugs and was shocked; almost 50% during the last 30 days (http://www.cdc.gov/nchs/fastats/drug-use-therapeutic.htm http://www.cdc.gov/nchs/fastats/drug-use-therapeutic.htm). A big chunk of that is probably birth control and blood measure meds, but still that seems like a really high fraction of people (and an excellent market size for this business).
praseodym 12y ago
This is quite common here in The Netherlands; if you have trouble taking your medication on time (especially elderly people do), your pharmacy will pack the pills in plastic bags on a roll, labelled with a description of its contents and date+time it should be taken. See e.g. https://www.efarma.nl/PAGES/sectieinfo.asp?SC=VP https://www.efarma.nl/PAGES/sectieinfo.asp?SC=VP (in Dutch, but has photos).
- unwind 12y ago
  Standard practice in Sweden, too. Pills are packaged in regional locations (called "dosage pharmacies"), shipped out, and then collected by customers in their local pharmacies.
Animats 12y ago
Many hospitals use such a system internally. Sometimes it doesn't work. See "How technology led a hospital to give a patient 38 times his dosage"[1]. This new mail-order system has far fewer crosschecks than that hospital system. [1] https://medium.com/backchannel/how-technology-led-a-hospital-to-give-a-patient-38-times-his-dosage-ded7b3688558 https://medium.com/backchannel/how-technology-led-a-hospital...
- pcurve 12y ago
  that was a good read, but it was about failure of poorly designed systems, rather than blister pack efficacy.
  - Animats 12y ago
    That hospital used robotic packaging of pills, labeled for each patient. That's very similar to the consumer-grade system discussed here, but with fewer crosschecks. A similar service for horse feed supplements has been available for years.[1] [1] https://www.smartpakequine.com/WhySmartPak.aspx https://www.smartpakequine.com/WhySmartPak.aspx
edmccard 12y ago
I take care of my elderly parents, who each have over a dozen different pills to take each day, and this kind of repackaging is really helpful; although I would have thought it's the kind of thing that drugstores already do. (At least two of the (non-chain, family owned) local drugstores where I live already do this. For example, http://findleyspharmacy.com/rxmap.html http://findleyspharmacy.com/rxmap.html )
kolev 12y ago
This is definitely not a novel idea, but it's well-executed. Anyway, my personal issue with this is the excessive packaging and possibly non-compact storage if you have to, for example, go abroad for a month.
hkiely 12y ago
Regardless of the company's ambition, the firm still has to compete with all of the other small businesses marketing the same packaging services in every city. Many actually have very similar machines manufactured by AmerisourceBergen. The role of a PBM is to create value for the payer; this typically occurs by the company using the collective power of its membership to negotiate down drug prices, specialty or otherwise. If creating value for the payer means increasing adherence then why not. At least that's what many PBM executives have said that I have spoken with. The largest customer is the pbm/ payer/ private insurer market where the benefits of adherence can be marketed to those who pay for the cost of patient noncompliance. I had a project very similar to this. However, my focus was the backend data system as my perspective was each patient may need a different compliance solution.
empressplay 12y ago
In Australia this is standard for the elderly already and every pharmacy does it. That said, the US and Canada could stand to make it standard practice there as well.
hiharryhere 12y ago
We've had these in Australia for years. It's called the Webster Pak and is a method of packaging done by pharmacies. It was invaluable for my grandparents when they were too old to see/sort their own pills. I think the webster pak looks more functional than lots of baggies. It's a less ambitious company though, it's not trying to be the whole pharmacy, just a method of packaging. http://www.webstercare.com.au/shop/item/community-webster-pak http://www.webstercare.com.au/shop/item/community-webster-pa...
- sfeng 12y ago
  There's a big advantage in the bags, in that you can grab one when you're heading out for the day or a handful when you're gonna be gone for the weekend. It's hard to do that with a giant week-sized card.
gurushackers 12y ago
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This start-up is a great example as to why it's important to understand who the players are that deliver healthcare in the US. You have the insurance companies that pay the costs (drug and non-drug). However, many insurance companies partner with PBMs (pharmacy benefit managers) and let them handle all of the processing (for a fee). Guess who one of the biggest PBMs are? CVS Caremark. Yes, the same CVS as the retail pharmacies. If this product is going to work, it needs to figure out how to create an incentive for the existing players to get involved. If you look at your drug benefit card, it likely has a list of "preferred pharmacies". Go there and you pay less, go somewhere else and pay more. The PBMs control where you get the best deal. And yes, it's typically at their own pharmacies (e.g. CVS). If this company were to approach a retail pharmacy with their idea, I'll bet the pharmacy says "no". Retail pharmacies already have contracts with PBMs/insurance companies that pays them a certain fee for dispensing. A retail pharmacy would likely lose money if they had this company repackage a prescription. The only way to make this attractive to the retail pharmacy is to make sure they either make the same or more money. That's up to the PBMs/insurers. So if you take a step back and think about what drivers insurance companies, it's all about cost. Not just dollars, but improved outcomes for patients since that lowers costs as well. Compliance (taking the right drug at the right time) is a huge issue in terms of drug costs. An insurance company might plop down $5K for a prescription. The patient may only take 3/4 of the doses and end up no better. That $5K was a waste. Asthma is a great example. Insurers are more than happy to pay $300/month for a drug that reduces ER visits. One ER visit can cost $1000K. Now prove to an insurer/PBM that this type of packaging saves more than it costs (e.g. improved compliance) and they will come knocking on your door. This of course entirely ignores the issue of drug distribution. There are some huge players out there and this company needs to figure out how to insert itself between the company that sends the drugs to the pharmacy and the pharmacy itself. I'll leave that for another time.

angersock 12y ago
If this product is going to work, it needs to figure out how to create an incentive for the existing players to get involved. I agree with your writeup, but I'd like to call this out in particular: What if all the existing players are the source of the problem? That's the real trouble facing startups in healthcare: everyone wants to partner with the existing players, but they're all basically profiteering bastards.
- toomuchtodo 12y ago
  > everyone wants to partner with the existing players, but they're all basically profiteering bastards. I was thinking this while reading refurb's comment and pleasantly surprised to get down to yours where its explicitly called out.
  - refurb 12y ago
    I guess it depends on how you define "profiteering". The drug distribution business has many competitors and margins are razor thin (think <2%). PBMs are also pretty competitive and I don't think they make a ton of money either. As for insurance companies, the ACA put limits on profit.
    - angersock 12y ago
      And yet Aetna does pretty well for itself: http://www.google.com/finance?q=NYSE%3AAET&ei=yIswVam_LOuJsge4_YHQBw http://www.google.com/finance?q=NYSE%3AAET&ei=yIswVam_LOuJsg... So does Humana: http://www.google.com/finance?q=NYSE%3AHUM&ei=44swVcjiAcSGsgfL5oCgCg http://www.google.com/finance?q=NYSE%3AHUM&ei=44swVcjiAcSGsg... And Anthem: http://www.google.com/finance?q=NYSE%3AANTM&ei=OIwwVYr5OIWDsQfltYGoAQ http://www.google.com/finance?q=NYSE%3AANTM&ei=OIwwVYr5OIWDs... And Pfizer: http://www.google.com/finance?q=NYSE%3APFE&ei=uYwwVeG2DezwsQfMhoCAAw http://www.google.com/finance?q=NYSE%3APFE&ei=uYwwVeG2DezwsQ... And Bayer: http://www.google.com/finance?q=ETR%3ABAYN&ei=Fo0wVcmsE6qysQfk84DoCg http://www.google.com/finance?q=ETR%3ABAYN&ei=Fo0wVcmsE6qysQ... And that's without even getting started on the corruption of equipment purchasing: http://www.washingtonmonthly.com/features/2010/1007.blake.html http://www.washingtonmonthly.com/features/2010/1007.blake.ht... Or the FDA: http://www.forbes.com/sites/davidmaris/2012/10/10/fda-recall-points-to-serious-problems-at-the-fda/ http://www.forbes.com/sites/davidmaris/2012/10/10/fda-recall... Or even the physician trade union itself: http://seattlepostglobe.org/2011/03/07/warnings-of-doctor-shortage-go-unheeded/ http://seattlepostglobe.org/2011/03/07/warnings-of-doctor-sh... (note that the govt. measure causing the shortage of residency slots was supported by the physicians themselves--only to later recant after the damage had been done) There are some players who have a hard time making an obnoxious profit, sure, but let's not pretend that's the general case. Those shiny new hospitals going up in your local medical center? That money isn't there because healthcare is so affordable and easy to get.

patmcc 12y ago

So simple, but such an improvement over the current system. Excellent idea. I just looked up how many people are taking prescription drugs and was shocked; almost 50% during the last 30 days (http://www.cdc.gov/nchs/fastats/drug-use-therapeutic.htm http://www.cdc.gov/nchs/fastats/drug-use-therapeutic.htm). A big chunk of that is probably birth control and blood measure meds, but still that seems like a really high fraction of people (and an excellent market size for this business).

praseodym 12y ago

This is quite common here in The Netherlands; if you have trouble taking your medication on time (especially elderly people do), your pharmacy will pack the pills in plastic bags on a roll, labelled with a description of its contents and date+time it should be taken. See e.g. https://www.efarma.nl/PAGES/sectieinfo.asp?SC=VP https://www.efarma.nl/PAGES/sectieinfo.asp?SC=VP (in Dutch, but has photos).

unwind 12y ago
Standard practice in Sweden, too. Pills are packaged in regional locations (called "dosage pharmacies"), shipped out, and then collected by customers in their local pharmacies.

Animats 12y ago

Many hospitals use such a system internally. Sometimes it doesn't work. See "How technology led a hospital to give a patient 38 times his dosage"[1]. This new mail-order system has far fewer crosschecks than that hospital system. [1] https://medium.com/backchannel/how-technology-led-a-hospital-to-give-a-patient-38-times-his-dosage-ded7b3688558 https://medium.com/backchannel/how-technology-led-a-hospital...

pcurve 12y ago
that was a good read, but it was about failure of poorly designed systems, rather than blister pack efficacy.
- Animats 12y ago
  That hospital used robotic packaging of pills, labeled for each patient. That's very similar to the consumer-grade system discussed here, but with fewer crosschecks. A similar service for horse feed supplements has been available for years.[1] [1] https://www.smartpakequine.com/WhySmartPak.aspx https://www.smartpakequine.com/WhySmartPak.aspx

edmccard 12y ago

I take care of my elderly parents, who each have over a dozen different pills to take each day, and this kind of repackaging is really helpful; although I would have thought it's the kind of thing that drugstores already do. (At least two of the (non-chain, family owned) local drugstores where I live already do this. For example, http://findleyspharmacy.com/rxmap.html http://findleyspharmacy.com/rxmap.html )

kolev 12y ago

This is definitely not a novel idea, but it's well-executed. Anyway, my personal issue with this is the excessive packaging and possibly non-compact storage if you have to, for example, go abroad for a month.

hkiely 12y ago

Regardless of the company's ambition, the firm still has to compete with all of the other small businesses marketing the same packaging services in every city. Many actually have very similar machines manufactured by AmerisourceBergen. The role of a PBM is to create value for the payer; this typically occurs by the company using the collective power of its membership to negotiate down drug prices, specialty or otherwise. If creating value for the payer means increasing adherence then why not. At least that's what many PBM executives have said that I have spoken with. The largest customer is the pbm/ payer/ private insurer market where the benefits of adherence can be marketed to those who pay for the cost of patient noncompliance. I had a project very similar to this. However, my focus was the backend data system as my perspective was each patient may need a different compliance solution.

empressplay 12y ago

In Australia this is standard for the elderly already and every pharmacy does it. That said, the US and Canada could stand to make it standard practice there as well.

hiharryhere 12y ago

We've had these in Australia for years. It's called the Webster Pak and is a method of packaging done by pharmacies. It was invaluable for my grandparents when they were too old to see/sort their own pills. I think the webster pak looks more functional than lots of baggies. It's a less ambitious company though, it's not trying to be the whole pharmacy, just a method of packaging. http://www.webstercare.com.au/shop/item/community-webster-pak http://www.webstercare.com.au/shop/item/community-webster-pa...

sfeng 12y ago
There's a big advantage in the bags, in that you can grab one when you're heading out for the day or a handful when you're gonna be gone for the weekend. It's hard to do that with a giant week-sized card.

gurushackers 12y ago

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