Welcome back to closing bell here on cheddar news,
turning now to a startup shaking things up. This
edition of cheddar shakers is brought to you by a
D. P. Now. Health technology company,
Capital R. X. Is on a mission to
end drug price distortion. The new york based startup
announcing last week the close of its$106 million series
C round bringing total fund raised 2$175 million.
So joining us now is AJ Loiacono ceo of capital
Rx and AJ congrats on the exciting milestone. So
how is Capital R. X. Working to bring
price transparency to the prescription drug market, ken?
Thanks for having me. And it's really simple.
The industry that we've created for drug pricing in the
United States unfortunately really rewards bad behavior. I think
everybody has a story from themselves or a loved one
where they go to the pharmacy, they can't afford
their medication, but more importantly when they go back
the price is different or it changes and why is
that? And this does not need to exist.
And it's one of the many things that we're solving
for at capital Rx. So us prescription drugs are
priced 2.5 times higher than anywhere else. Why is
that? And what needs to be done to change
it? Well, I think what we need to
start with is we need transparency around drug pricing.
I think one of the problems that we have not
to get too technical is that the patient at the
register and the pharmacy contractually can't even communicate on price
and this creates a system where it's extremely opaque and
complex. So the first thing we need to do
is we need everyone to have visibility to price not
just the price in which it's sold but the price
in which prescriptions and drugs are purchased at and this
will create efficiency. That's first and foremost that what
needs to be done in this country. So like
you mentioned drug prices, they change pharmacy to pharmacy
and consumers never know the price of the drug until
they're already at the register. So how does this
impact the average american and their health. So one
of the things that we strive to do at capital
R. X. Is we understood that a lot
of the price encumbrance which is making drugs more expensive
is because the system is so inefficient is that when
you have the perfect market and in elastic demand curve
or drug prices seemingly only go up year after year
. There isn't any innovation, there is only really
consolidation. So what we did at capital Rx is
we modernize the technology that you can't see. So
when the pharmacist goes on the terminal or the tech
and they're typing in the benefit information or the prescription
information and they hit send hundreds of checks are happening
on the back end. Who's eligible, Who's in
network, what does it cost, what's my copay
, what's the drug to drug interaction the drug and
utilization review all of these things are happening in milliseconds
and cost money. So our technology stack duty that
we built round up and judy is the brains behind
our organization helps us deliver medication more cheaply. The
administrative costs fall and then we can provide that transparent
price and savings directly to the members. Now last
week the Federal Trade Commission launched an inspection into the
prescription drug middleman industry. What is the middleman industry
? And is this inspection a good step forward for
the industry as a whole? And what do you
hope this will accomplish? Well the middlemen as they're
speaking to our pharmacy benefit managers. PBMs were one
of them and our job is to administrate the benefit
on behalf of self insured employers or even health plans
and carriers And so I think it's an excellent first
step for the government to lean in and to kind
of take stock of this system. I think the
pharmacy benefit industry, if you think about it has
grown up very quickly over the last 23 years,
we've gone from an industry that's roughly 100 and$50
billion to topping$600 billion this year. And it's
one of those unique industry where there's not a lot
of oversight. You might say it's got many mothers
and fathers. So does it come under HHS and
CMS, does it come under the department of labor
for oversight. I'm glad that the FTC is leaning
in because I think it's time that we have a
frank discussion on some of the practices. I think
PBMs do provide a valuable service as far as creating
that administrative infrastructure that we need. But it does
require a moment to pause and reflect upon some of
the rules that have been created Over this 23 year
period of expansion. My last question for you is
Mark Cuban also founded a company aimed at reducing prescription
drug prices. What do you think of the company
and how does it compare to yours? Capital R
. X. Yeah, first of all love what
Mark is doing. Um we're an agnostic administrator so
anyone can be in our network. So for us
we love partnering with companies like Mark as well as
every large and small fulfillment house, both at retail
mail and specialty. So we love the idea.
We welcome anyone who can provide lower cost and a
better service experience. Sign us up, we're right
there with you. I think what people often overlook
as you do need an administrator to provide the eligibility
the information for the plan, the plan design the
clinical review. All that needs to be done.
So we love working with someone like Mark and his
organization and others that can help us together reduce cost
. Alright, thanks again. AJ Loiacono ceo of
capital Rx. We appreciate you coming on