“One of the biggest challenges in the U.S. healthcare system is that there is no understanding of actual — or fair — drug pricing,” said AJ Loiacono, CEO of Capital Rx, in an interview Monday.
Loiacono, who is outspoken about what is wrong with the drug pricing world, claims to be developing a more fair framework through his upstart pharmacy benefit management company CapitalRx. The New York City-based company appears to have convinced investors of this vision. On Monday, Capital Rx closed a $106 million Series C funding round, increasing the pharmacy benefit manager startup’s overall funding to $175 million. The round was led by B Capital, with participation from General Catalyst as well as existing investors Transformation Capital and Edison Partners.
When Loiacono and his team founded Capital Rx in 2017, he said they set out not only to reduce costs in the prescription marketplace, but also to “define the electronic infrastructure to process claims over the next 50 years.”
Drug pricing is not just a supply chain issue, but also an infrastructure issue, Loiacono declared. Capital Rx aims to efficiently process, administer and pay for claims in a way that provides the best operational support with the lowest overhead. So the startup built its platform, called JUDI, to do exactly that.
JUDI includes features for claims adjudication, prior authorization, data exchange, claims reporting and billing and reimbursement. It is the first enterprise pharmacy platform to unify all these operations, Loiacono said.
The platform serves health plans, health systems, prescribers, third-party administrators and pharmacy benefit managers. By enabling real-time communication between physicians, pharmacies, patients, and plans, it facilitates faster and more efficient prescription processing for its members.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
To use JUDI, Capital Rx charges a flat administrative fee. This can be a flat monthly fee based on selected services, or the fee can be on a per-prescription or per-member-per-month basis.
Loiacono said his startup does not view any other companies as competitors because “all PBMs and health insurance companies can benefit from JUDI.” He said Capital Rx differentiates itself by showing the pharmaceutical and healthcare industries that it is possible to provide a transparent pricing model that reduces costs, improves service and increases operational efficiency. Still, there are startups and more established companies in the overall pharmacy space that also aim to provide price transparency and lower costs, such as GoodRx, EmpiRx and Navitus.
Capital Rx’s recent funding round comes amid record growth. The company’s consumer membership doubled over the past year, now serving 1.2 million members. The startup also recently added two major customers, WTW, which operates the largest pharmacy benefits purchasing coalition in the world, and CDPHP, a major health plan in New York.
The company expects to add 1 million patients for the 2023 plan year. It will use the funds it raised on Monday primarily for research and development but will also invest in growing its team and operational technology, according to Loiacono.
“The average person will fill hundreds of prescriptions during their life, which gives us the rare opportunity to positively impact every person in the country,” he said.
Photo: cagkansayin, Getty Images
