The pharmacy benefits industry is estimated to be worth $550B per annum but it’s filled with complexity and inefficiencies. There’s also no incentive for the incumbent companies to change the model to offer more transparency. Capital Rx, the technology-driven pharmacy benefits manager for employers, challenges that. Launched in 2017, the startup aggregates structured and unstructured data into a single platform so employers can have a full view to measure the health of their population and make data-driven decisions for their employees. Unlike its competitors, Capital Rx charges a flat administrative fee, allowing it to focus on improving patient outcomes and better servicing the employer. With the costs of drugs skyrocketing out of control, Capital Rx is doing its part to ensure that employers are able to manage these costs by leveraging technology in an efficient manner.
AlleyWatch chatted with CEO AJ Loiacono to learn more about the inspiration for the company, the company’s future plans, and recent round of funding.
Who were your investors and how much did you raise?
Edison Partners, $12M Series A.
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Tell us about the product or service that Capital Rx offers.
Capital Rx is a pharmacy benefits manager that oversees prescription benefit plans on behalf of employers, unions, and government entities.
What inspired you to start Capital Rx?
After viewing the inefficiency and unnecessary complexity of the current pharmacy benefit system, I realized the US healthcare system desperately needed a better model.
How is Capital Rx different?
Capital Rx has a unique pricing model that removes unnecessary complexity and misaligned incentives, combined with a data-driven approach to improve plan performance and patient outcomes.
What market does Capital Rx target and how big is it?
Target Market: pharmacy benefit industry. Market worth: $550B.
What’s your business model?
Unlike our competitors, who make money by keeping the difference between the price the employer is charged and the amount reimbursed to the pharmacy, Capital Rx charges only a flat administrative fee. Without the need to argue about price or reconcile complex contracts, we are able to focus our efforts on improving patient outcomes and better servicing the employer, instead of protecting hidden margins.
Who do you consider to be your main competitors?
Cigna-Express Scripts
CVS-Aetna
United-Optum
What was the funding process like?
We worked with a handful of venture capital firms, ultimately selecting the partner that both understood the importance of improving the current prescription benefit model as well as our vision to achieve this goal. Edison Partners quickly emerged as the firm we wanted at our side.
What are the biggest challenges that you faced while raising capital?
Due to the inherent complexity of prescription pricing and the pharmacy supply chain, it was critical to identify firms that had an appropriate level of industry experience and shared our desire to improve one of the most flawed markets US healthcare.
What factors about your business led your investors to write the check?
A combination of prior entrepreneurial experience, a large addressable market, proprietary technology, aggressive growth, and an extraordinary level of customer satisfaction.
What are the milestones you plan to achieve in the next six months?
We have an aggressive hiring schedule to keep pace with client implementation and product development. If we continue to attract the same level of talent at scale, we will achieve our primary goals.
What advice can you offer companies in New York that do not have a fresh
injection of capital in the bank?
If you truly believe in your model, persevere and find a way to demonstrate client adoption, on any level.
Where do you see the company going now over the near term?
We will continue to expand our organization and introduce more clients to our services, but we are most excited about the innovative solutions we are bringing to market.
Date: 23/07/2019
Source : Alleywatch
