Blink Health, a company that provides discounts to prescription drugs, just raised another $US90 million.
The New York-based digital health startup said on Wednesday its series B was led by venture capital firm 8VC, along with strategic investors. That, combined with the $US75 million Blink Health raised previously, brings its total funding to $US165 million.
Blink Health CEO Geoffrey Chaiken told Business Insider that the funds would go toward hiring more engineers, along with marketing about what the company’s technology does.
Here’s how it works
Blink Health scours the Internet to find out what people are actually paying for their prescriptions. Then, in the case of generic medications, Blink Health negotiates with the pharmacy to get a certain price.
Say you need to pick up a prescription for your medication, but you have a high deductible plan that requires you to pay $US3,000 out of your own pocket before your insurance starts picking up the rest of the tab. Instead of going to the pharmacy and accepting whatever price they offer (which can vary from pharmacy to pharmacy), you could download the Blink Health app, or go to the company’s website.
In the app, you can find your prescription and purchase it directly through the app. Then, when you get to the pharmacy counter, you show your phone to the pharmacist who rings it up instead.
There are other prescription services that can show you different retail prices, such as GoodRx. One of the biggest differences between Blink Health and those sites are that instead of possibly having to choose a different pharmacy from the one you usually go to, Blink Health users can still go to their regular pharmacy, so long as it accepts Blink Health, which more than 57,000 do.
As of March, Walgreens pharmacies are no longer included in the Blink Health network. The service doesn’t factor in health insurance.
In return, Blink gets a cut of the transaction that can vary from a few pennies to a few dollars, Chaiken said. It’s different from other drug industry middlemen, who tend to make a percentage of whatever price the drugmaker sets. Chaiken said Blink took a conscious decision to not do that.
The changing way people are paying for prescriptions
Americans are increasingly facing high prescription costs.
In particular, high-deductible health plans are on the rise. According to a September survey, the percentage of workers with an insurance plan that requires them to pay up to $US1,000 out of pocket passed the 50% mark for the first time. That means consumers have a clearer picture of how much healthcare costs them, and that unexpectedly high costs are hitting more people.
It’s led to people paying as much as a mortgage payment for a monthly supply of the live-saving diabetes medication insulin, while others have turned to crowdfunding sites like GoFundMe to cover the cost.
Under these high deductible plans, people are exposed to the list prices of medications, the price a drug company sets before factoring in rebates and discounts that are paid to insurers, ideally to pass along savings to patients. According to a March report from the Pharmaceutical Research and Manufacturers of America (or PhRMA), 20% of those rebates aren’t getting into the hands of the people paying the full price for the medication.
Blink Health thinks it can help, by offering similar discounts direct from the drugmakers to consumers. In December, Blink Health partnered with insulin-maker Eli Lilly and the pharmacy benefit manager Express Scripts to offer up to 40% discounts to its insulins. That partnership changed the way Blink Health provided discounts to medications. Previously, the company could negotiate prices for generic medications, but were virtually locked into the retail price for branded medications.
“Until the Lilly deal, we weren’t able to pass through what were historically called rebates to patients,” Chaiken said. “It adds money to the Blink wallet.”
Chaiken said he anticipates more branded drugmakers starting to provide rebates through Blink Health’s system.
“We expect every manufacturer to be on the platform,” he said. That’s in part because it’s relatively quick to set up and doesn’t require any changes to existing contracts.
Blink Health currently has about 1 million monthly users, a number Chaiken described as growing exponentially.
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