
Pharmacy Startup PillPack Could Change the Way America Takes Its Medicine - JrobertsHstaff
http://www.forbes.com/sites/sarahhedgecock/2015/04/15/this-pharmacy-startup-wants-to-change-the-way-you-take-your-medicine/
======
refurb
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
_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
> 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
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
And yet Aetna does pretty well for itself:

[http://www.google.com/finance?q=NYSE%3AAET&ei=yIswVam_LOuJsg...](http://www.google.com/finance?q=NYSE%3AAET&ei=yIswVam_LOuJsge4_YHQBw)

So does Humana:

[http://www.google.com/finance?q=NYSE%3AHUM&ei=44swVcjiAcSGsg...](http://www.google.com/finance?q=NYSE%3AHUM&ei=44swVcjiAcSGsgfL5oCgCg)

And Anthem:

[http://www.google.com/finance?q=NYSE%3AANTM&ei=OIwwVYr5OIWDs...](http://www.google.com/finance?q=NYSE%3AANTM&ei=OIwwVYr5OIWDsQfltYGoAQ)

And Pfizer:

[http://www.google.com/finance?q=NYSE%3APFE&ei=uYwwVeG2DezwsQ...](http://www.google.com/finance?q=NYSE%3APFE&ei=uYwwVeG2DezwsQfMhoCAAw)

And Bayer:

[http://www.google.com/finance?q=ETR%3ABAYN&ei=Fo0wVcmsE6qysQ...](http://www.google.com/finance?q=ETR%3ABAYN&ei=Fo0wVcmsE6qysQfk84DoCg)

And that's without even getting started on the corruption of equipment
purchasing:

[http://www.washingtonmonthly.com/features/2010/1007.blake.ht...](http://www.washingtonmonthly.com/features/2010/1007.blake.html)

Or the FDA:

[http://www.forbes.com/sites/davidmaris/2012/10/10/fda-
recall...](http://www.forbes.com/sites/davidmaris/2012/10/10/fda-recall-
points-to-serious-problems-at-the-fda/)

Or even the physician trade union itself:

[http://seattlepostglobe.org/2011/03/07/warnings-of-doctor-
sh...](http://seattlepostglobe.org/2011/03/07/warnings-of-doctor-shortage-go-
unheeded/)

(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.

~~~
refurb
I'm not sure what stock prices have to do with "profiteering".

------
praseodym
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
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
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...](https://medium.com/backchannel/how-technology-led-a-hospital-to-
give-a-patient-38-times-his-dosage-ded7b3688558)

~~~
pcurve
that was a good read, but it was about failure of poorly designed systems,
rather than blister pack efficacy.

~~~
Animats
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
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)
)

------
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------
hkiely
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.

------
hiharryhere
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-
pa...](http://www.webstercare.com.au/shop/item/community-webster-pak)

~~~
sfeng
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.

------
patmcc
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).

------
kolev
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.

------
empressplay
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.

