Making Prescriptions Affordable For Everyone: Rx Savings Solutions
KANSAS: Laura, the mother of a six-year-old boy with Down’s Syndrome, often struggled to afford her son’s $200 monthly prescription. Despite serious risks, she had to administer his medication sparingly so it lasted longer. Unfortunately, this had consequences: on days he didn’t get eye drops, for instance, he was vulnerable to severe allergies and had to be kept indoors under special care.
Laura’s story points to a troubling behavioral trend that’s not limited to high-cost children’s medication. According to the Kaiser Family Foundation, 21% of Americans have skipped filling a prescription due to cost. Further, 15.1% of adults ask their doctor for a lower-cost medication, while 1.6% buy prescription drugs from another country.
Rx Savings Solutions is shaking this trend by providing prescription benefits and educating individuals and employers about potential savings opportunities with their prescription medications. In the above story, when Laura learned that her health plan offered Rx Savings Solutions and discovered there was a more affordable way to purchase the drops, she never again had to skip a prescription fill. Amanda Signorelli sat down with Michael Rea, founder and CEO of Rx Savings Solutions, to learn how his company is helping people all over the country.
- Amanda: Hi Michael. Affordable healthcare is making the news almost every day. There are problems that affect so many people personally. Can you tell us about the specific problem you are trying to solve?Michael : The real problem is people are being prescribed drugs they can’t afford, prices continue to climb, and the pharmacy benefit experience is too complex. All of that has negative downstream impact on productivity, how often we visit the ER or hospital, and our overall wellness and happiness.
- Amanda: What’s the magnitude of this problem, if you could put a number to it?Michael : There are $100 billion in avoidable prescription drug costs each year. 7 out of 10 Americans take prescription meds; it’s a $400 billion industry with enormous opportunity for digital tools like ours, and it will grow as we expand our offerings.
- Amanda: That’s a pretty big challenge. What triggered you to take this up?Michael : I was working in a retail pharmacy and had a patient named Betty come in with eight prescriptions to fill. She asked me which ones she could skip that month, because she couldn’t pay for them all. She wasn’t alone. This was Groundhog Day for me at the pharmacy. I knew there had to be a better way.
- Amanda: And you found a better way – a better model?Michael : We began with a direct-to-consumer model but quickly realized we could never adequately serve or reach the most people just one at a time. In 2013, we began offering our tool to employee groups, which they could offer as a benefit, and a short time later we started selling directly to health plans. We license the solution to them on a per member, per month basis.
- Amanda: It’s interesting how your model has evolved over these years. With your business growing as it has, what would you say has been the real impact you have created?Michael : Our revenue has grown in five years from $179,000 to nearly $6 million. More than one million members now use our solution, and that number is growing at a rate of 48% year over year. Clients who have been live for at least one year have saved a collective $17.8 million so far on prescription drugs. More important to me, though, are the individual stories when a member tells us they saved $500 this year. That’s a Christmas for someone’s family, right there.
- Amanda: That’s amazing. I’m sure winning the trust of such customers must be very rewarding on its own. How did you convince the first few customers to take up your offering?Michael : We actually landed our first customer while I was still working somewhere else. I would make and take calls over lunch from the roof of the parking garage. As a company, our first big deal took 12 months. We’ve compressed that significantly now, but the pitch was the same. We knew the market, their issues. We demo’d the product. Most people are skeptical with anything outside the box. But we showed them exactly how much they could save and how they could make their employees’ lives better.
- Amanda: And how did you convince investors to back you? How easy or difficult has it been to raise capital?Michael : It’s never-ending, but every time you raise capital is easier than the last. I didn’t get very far the first time, so I went to my own bank account. Then it was friends and family. Eventually we needed the kind of check people in my network couldn’t write. We found some angel investors who understood where the business was and didn’t over-lawyer things to death. Two years ago we met a high-net worth individual who pulled together people he knew. It’s a lot easier once you get past series A.
- Amanda: The pharmaceutical space seems very crowded. What would you say are some of your competitive advantages?Michael : It’s more crowded than ever. We sum up our advantage as the “4 P’s”: We’re Pharmacy experts. The solution is Patented. It has Proven to eliminate complexity and lower costs by analyzing pharmacy claims, both both clinically and financially. Probably the biggest component is Personalization.
- Amanda: And let’s talk about a fifth P: your People. Tell us a bit about your team. What do you look for when you hire?Michael : We have 50-something employees today and expect to double in size by the end of 2018. We look for winners, people who are passionate about the mission and who are the best at what they do. To borrow from Steve Jobs, we don’t hire people and tell them what to do. We hire them to tell us what to do.
- Amanda: What defines your company culture? How did you go about cultivating one in the first place?Michael : I think when you hire the right people, culture develops organically. We can all get on the same page to get where we’re going. Our employees could go elsewhere and make more, but they value meaningful work and having fun. Above all, it’s a culture where we tell the truth and we can be who we are.
- Amanda: A wise motto. What’s in store for the future? What are the trends you’re watching closely in this space?Michael : The shift to HDHPs [high-deductible health plans] is forcing consumers to be more price-conscious, but no one really knows what a drug costs. Despite all the outrage lately, prescription drug prices have actually spiked. I don’t think anything short of universal pricing benchmarks could shake up this industry. But the market is ripe for disruption. I think some of the most common names in the business will be dinosaurs in 5-10 years, and some we’ve never heard of will emerge as transformational.
- Amanda: Michael, this has been a great conversation. Thanks for educating us about the challenges in healthcare and medication, and all the ways Rx Savings Solutions is addressing them. We wish you all the best for your journey ahead. I’ve got just one final question – if you were to have a mascot for Rx Savings, what would it look like? Michael : A wolverine: Small but fierce, and stronger than our size would suggest.
- Amanda: Awesome! Thank you so much for your time.