Follow Datanami:
November 28, 2016

Data Platform Seeks to Cut Soaring Rx Drug Costs

(VonaUA/Shutterstock)

A cloud-based data management platform designed to straighten out what critics say is the mess that is the current approach to managing drug benefits got a boost when ex-Apple CEO John Sculley joined the cause.

Sculley expanded his duties at pharmacy benefit management (PBM) startup RxAdvance in mid-November as board vice chairman and chief marketing officer. He co-founded the company in 2013. RxAdvance, based in Southborough, Mass., launched its “collaborative PBM cloud” in 2015 to help drug benefit managers reduce what company executives characterize as “unsustainable” pharmacy and related medical costs.

The healthcare analytics startup estimates that about half of the roughly $700 billion in unnecessary medical expenses stem from “avoidable drug-impacted medical costs.” Drug benefit managers overseeing more than $370 billion in prescription drug spending lack up-to-date data management platforms. The RxAdvance collaborative cloud platform attempts to address the problem at the “point of care” (doctors writing drug prescriptions) and the “point of sale” (pharmacies).

The result, the company claims, are cost savings via reduced administrative fees, lower unit costs for prescription drugs along with better regulatory compliance. “Legacy [drug benefit managers] are unable to take avoidable drug-impacted medical risk due to their inability to comprehend cost and quality management, and therefore end up providing only low-value transactional services,” the startup asserts.

Riva Ika, RxAdvance’s CEO, further claims that the startup’s collaborative cloud approach could help healthcare plans using the nation’s largest drug benefit managers save as much as 12 percent on drug costs and as much as 25 percent on “avoidable drug-impacted medical costs.” Among the ways to reduce those costs are using the data platform to predict healthcare coverage gaps as they relate to drug prescriptions along with reducing the impact of adverse drug reactions.

Other cloud-based services include targeting lower cost generic drugs and negotiating lower contracts with pharmacy networks and larger drug manufacturer rebates from contractors. “We’re taking an existing industry and we’re going take out the inefficiencies,” Sculley told CNBC in a recent interview, predicting annual revenues for RxAdvance of more than $1 billion by the end of 2017.

So far, the healthcare analytics firm has staged two funding rounds but has not disclosed how much venture capital it has raised.

Recent items:

Europe Eyes Big Data for Sustainable Healthcare

Healthcare Emerges as Hadoop Use Case

Datanami