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Startups Get Head Start on Health System Prescription Innovations

Analysis  |  By Mandy Roth  
   September 05, 2018

Solutions address affordability and make dispensing more convenient and secure.

With drug prices rising to unaffordable rates, and an opioid crisis in full bloom, the pharmaceutical industry is ripe for innovation. The prescription dispensing process is tightly bound to these dynamics.

While American Patients First, the new blueprint from the Department of Health and Human Services (HHS), seeks to transform matters on a national scale, numerous startups and entrepreneurs already are launching solutions that they believe will make a difference to health systems.

I spoke to several innovators attending the Health:Further conference in Nashville last week about the trends behind this, along with potential solutions that address some of the challenges health systems would like to address: affordability, compliance, patient convenience, and the need for more efficient methods to dispense and organize prescriptions.   

The Problem

An excerpt from an online notice published May 16, 2018, seeking public comment about the HHS Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs, provides a succinct recap of the problem and need for innovation:

"Millions of Americans face soaring drug prices and higher out-of-pocket costs, while manufacturers and middlemen such as pharmacy benefit managers (PBMs) and distributors benefit from rising list prices and their resulting higher rebates and administrative fees. An unprecedented re-examination of the whole system and opportunities for reform is long overdue.

"We believe a national focus on lowering list prices and out-of-pocket costs has the potential to create new and disruptive alternatives to the current system, while maintaining its many virtues. It is time to realign the system in a way that promotes the development of affordable innovations that improve health outcomes and lower both out-of-pocket cost and the total cost of care."

As reported May 4, 2017 by CNBC, "Spending on prescription medicines in the United States will increase 4% to 7% through 2021, reaching $580 billion to $610 billion, according to a report released by QuintilesIMS Holding" (now IQVIA), which compiles data for the pharmaceutical industry.

How Health Systems and Providers are Impacted

The innovators I spoke with provided a number of insights about how these issues impact health systems and providers.

Patients who cannot afford medication are less likely to be compliant with discharge orders and more likely to be readmitted, says Miriam Paramore of OptimizeRx.

"We know about one-third of patients say they can't afford their medications," says Paramore. "When patients leave the hospital setting, they have a set of discharge instructions, part of which includes their post-discharge medications. One-third of those are going to have a problem with affordability."

Tal Rapke, MD, of ScalaMed, participated in a competitive pitch session at Health:Further, where innovators presented their solutions to a panel of experts. According to his company:

  • Errors and side effects from drugs cause 10% of all hospital admissions
  • Clinicians waste up to 25% of their time on administration related to prescriptions and finding out medical information about their patients
  • Security issues present a challenge related to patient data. In 2015, 120 million records were hacked in health data breaches.
  • Interoperability issues create barriers to developing easy and efficient technological solutions

Ken Barnes of VendRx points to another issue that is important to health systems with pharmacies that dispense medication or employ physicians who prescribe it. "A lot of rules are changing regarding pharmacy dispensing," he says.

Indeed, the Drug Enforcement Administration is cracking down on pharmacies and prescribers that dispense disproportionately large amounts of controlled substances, leading to 28 arrests and 147 revoked registrations during a 45-day period this winter.

One other issue these entrepreneurs pointed out is that patients often don't feel well when they need medication, particularly post-discharge. Obtaining prescriptions is inconvenient and time-consuming. Those combined factors can impact their patient experience, lead to negative impressions of the health system, and could diminish HCAHPS scores.

Solutions in Development

There are numerous innovations in development with the hope of making the cost of prescription drugs more affordable, reducing inconvenience to patients, and enhancing security. Here's a glimpse of a few offered by the startup companies I spoke with. None are yet in use by health systems, yet they provide a glimpse into the ideas that may reduce costs and change the way prescriptions are dispensed in the future:

  • OptimizeRx is a patient financial support software application that connects manufacturers, providers, pharmacies and patients. It replaces traditional physical drug samples by automating the process of distributing coupons and vouchers into healthcare providers’ electronic prescription workflow, then delivering them electronically to the pharmacy. The digital paperless platform offers patients cost savings, education, and adherence tools at the point of prescribing, including during discharge.
  • ScalaMed offers a patient prescription app utilizes blockchain technology, creating a cryptographically secure network. It plugs into the EMR and provides prescriber, pharmacy, and patient visibility into prescriptions from all sources. Such a system would provide advantages for telehealth practices and when there's a need to prescribe to patients in remote locations.
  • VendRx is a secure, automated prescription dispensing machine that resides in a provider's office. Once an e-prescription is ordered, it goes directly to the vending machine. It takes about a minute for the patient to fill their prescription on premise.

Mandy Roth is the innovations editor at HealthLeaders.


Patients who cannot afford medication are more likely to be readmitted.

Drug errors and side effects account for a substantial number of admissions.

Innovation is needed to make medications more affordable and dispensing more convenient.

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