Radical Clarity in Drug Pricing: How Rescription Uses the 340B Program and Patented Tech to Lower Costs

Speaker A: Foreign. Welcome to Product and Health Tech. I'm Chris Hoid, principal at Vynyl. Today we're diving into the world of prescription drug cost innovation with Scott Martin, founder and CEO of Rescription. Scott returns to our podcast to share some updates. Since we last spoke with him a couple of years ago, Prescription has pioneered a unique approach, leveraging the 340B federal program to dramatically reduce prescription costs benefiting health systems, employers and patients. In our conversation, we explore Scott's response to the recent Wall Street Journal article about Rescription, highlighting how they're using the 340B program as intended while ensuring both health systems and patients benefit. How, uh, Rescription's partnerships with the health systems Bergen, Newbridge and Baton Rouge General are delivering cost savings while providing $0 co pays to patients. Their patent pending best price adjudication technology developed in collaboration with Vinyl that enables upfront processing at scale and differentiates them from traditional health system approaches and Prescription's ambitious expansion plans across 14 states with 15 additional health systems and final negotiation stages. Let's jump into that conversation. So, Scott, Rescription, uh, was mentioned a few days ago in Wall Street Journal article, uh, sort of referenced as part of a new breed of drug middlemen. How would you differentiate Rescription's approach both from traditional PBMs and the other startups mentioned in that piece?

Speaker B: Yeah, thanks for that. Um, our entire model is 100% different from what exists today. We use the term radical clarity that we deliver. Um, so everything from top to bottom, bottom to top is completely different. And that starts with having an actual guaranteed published price for every single prescription. And you combine that with the only way that we generate revenue, which is a simple per member per month subscription fee. And just those two things eliminate everything that everybody can't stand about a pbm, whether it's spread pricing, formulary games, rebate games, the contract language that legally lets them play those games. So we've really reconstructed, uh, our deliverable and our program and our product from the bottom up to be different at every component, uh, from what exists today, which is really what's necessary in order to create a meaningful solution to the problem that everybody's dealing with.

Speaker A: The piece was interesting, right? It, uh, mentioned your solution in the context of how it utilizes this federal program. Right. The 340B program, which I hadn't, I hadn't seen discussed in the past. As far as we can tell, you guys are really driving engagement. You're saving folks a lot of money. This was the first time I've sort of seen it framed the way that it was. What was your reaction to that?

Speaker B: Yeah, no, we were thrilled that the article came out. Uh, exposure is terrific, especially as a, as a startup. And look, you take a leap of faith when you get interviewed. You don't know what the story, uh, is, what their take is going to be on it. But they were extremely accurate in what they delivered. So we're most pleased about that aspect of it. But there are a lot of misconceptions with 340B. I think the biggest key in the article did a good job getting this across, that we are using 340B as it was intended to be used as the letter of the law. Uh, the procedures, the compliance, all of that is part of our program and actually it even enhances it more. Uh, one example of that is that, you know, the manufacturers complain that just the uh, health system is generating revenue and that the, the patient is still paying top dollar for the prescription drug. In our model, the patient pays zero for the drug. So not only does the health system benefit, but the patient benefits as well. So there's quite a few misconceptions. Uh, one of the biggest ones is that this is not, yes, it's a government program, but uh, these revenue dollars, this income, so to speak, for disproportionate share health systems that are treating the indigent is not coming from the government, it's not coming from taxpayer dollars. It's actually coming from the drug manufacturers. So, uh, that's where the money streams in from. And it's actually um, a very clever program that the government put together to offset the losses that uh, these disproportionate, uh, share health systems genuinely need to offset the losses they take by treating, um, the indigent, uh, population.

Speaker A: We had you on the product and health tech podcast a couple years ago at the time you mentioned, you know, I think you were maybe just starting, um, a partnership with Newbridge Bergen Rutgers Health System in New Jersey. And I think this, this latest journal piece also mentioned that you've started working with, um, Baton Rouge. So can you share a little bit how those partnerships have evolved since we last spoke and what you learned from those initial implementations?

Speaker B: Yeah, so, uh, Bergen Newbridge, which is part of Rutgers University Health, was really our, um, and again back to speaking with Morgan in the interview that you referenced. That was really going from concept to proof of concept. We went live 1, 1 23. Um, happy to say that, uh, the savings continues. There are roughly 30% savings. Uh, the deliverable has exceeded expectations, uh, from a consumer standpoint, both the patient utilizers as well as the employer. Um, and then that has grown into signing Baton Rouge General up, which is about double the size of Bergen Newbridge. And we're almost three months into the program. Uh, they're currently at 27% savings, trending upwards towards 35%. Um, and uh, again, the um, favorability comments back from uh, the utilizers is. I, um, mean the quotes that we're getting from Baton Rouge General are just uh, terrific. The testimonials, um, HR benefit team has said they've never had a transition go smoothly as what it did as the process with, uh, with rescription. So we continue to beat expectations. And now we're focused on the employers in Louisiana and uh, we're bidding on the state, we're bidding on lsu, uh, the city of Baton Rouge, um, a large number of just great clients that uh, we're hoping to work with, uh, both small, uh, medium and large. As far as employee counts.

Speaker A: Very cool. Um, okay, so I'm curious. Some pharma companies have taken measures to restrict 340b discounts in recent years. Are you viewing that as a headwind? Is that some potential industry pushback? And how do you think about that? How might you address that?

Speaker B: The law stands, so, um, they're mandated to participate in it. But where some of the pushback is, for example, is on contract pharmacies. Um, some hospitals have upwards of 600 pharmacies that they've contracted with, uh, where they can go back and essentially get the spread between 340b acquisition price and retail. Uh, and that's how they generate their, their revenue. Um, pushback on those contract pharmacies, uh, is occurring by the manufacturers. But what's unique again with, with our model is that we don't work with contract pharmacies. We util in house pharmacy of the health system, which is what the manufacturers are arguing for. So, um, just like the example I gave, um, with them wanting members to benefit from a lower cost, our members pay zero and we're using the actual pharmacies at the health system partner. So we're really turning any of these headwinds into tailwinds, um, from the standpoint of not only 340B compliance, but what's good for the health system and what the manufacturers are actually looking for.

Speaker A: I love that. Okay, very cool. So, you know, it sounds like you guys are clearly innovating on business model, right? I know you're also innovating on products and technology. Can you Talk a little bit about what the rescription sort um, of tech suite looks like and how that drives um, outcomes for patients.

Speaker B: Yeah, the whole key to this is being able to do it at scale. And we've got patent pended adjudication technology that vinyl has played a role in developing with us. Um, it allows us not only to do this at scale but to do it utilizing ah, compliance and also um, up front. And what I mean by that is currently health systems are doing their adjudication of the claims after the fact and taking the spread. In order to do it the way that we're doing it without a spread and to be able to do it with the employer and the employee member participating, it's got to be done up front as far as being able to adjudicate based on the plan design, the benefits that the employer has set up. And that's what our technology allows us to do. And we're thrilled that it's patent pending and it does it at scale and allows us to go out to market, um, and expand what we're doing. Uh, the name of the game for us is to expose as many employers and employee members as we can to the program, um, to really fulfill our mission, which is prescription health equity for all so that we can bring these lower cost drugs to the masses and do it in a way where people can actually afford their prescriptions. And part of the testimonials that we're seeing, um, or that we're being inundated with is the fact that members admit that they weren't taking the prescriptions because the cost shifting from the employer caused it to not be affordable anymore. And by us providing the $0 copay, they're back on their prescriptions, they're out of the emergency room, their outcomes are improving. So we're thrilled that's the mission of our company and that's what we're providing.

Speaker A: Very cool. Okay, last question. I just want to give you a chance to talk about what's coming next. I know you talked about, um, you know, marketing towards employers in the state of Louisiana. Uh, anything else on the you know, near to midterm roadmap this year, next year, either on the sort of, you know, product management side or on the business growth side.

Speaker B: Yeah. The exciting thing is the momentum's building and now we're marketing in 14 different states. We've got 15 different health systems in addition to the ones we're working with, uh, that are in final stages of negotiations, all spread out across the country, which gives us our national footprint, uh, to be able to do what we want to do. And then it really just turns the page on all these other exciting deliverables from bringing infusion, uh, therapy into it, um, which is another big expense for employers for medications that need to be administered at a clinic, clinic or a doctor's office or in the hospital where there can be five, six times, uh, markup on the prescriptions where we can help obviously in that side as well, um, uh, abandonment and non adherence, um, we're already starting to tackle and that enables us to actually show the employer a meaningful ROI on the deliverable and improved outcomes. M. Um, and there's a long list of additional things warehousing our data and being able to utilize our data to further benefit the employer and the employee members. So there's a long to do list and we're just getting started. And um, we truly believe that we are fixing the uh, prescription drug, uh, system in the country for employers. And uh, we're full speed ahead.

Speaker A: Excellent. Scott, thank you so much for joining us today.

Speaker B: I appreciate it. It was great to talk to you again.

Speaker A: We will go ahead and link the Wall Street Journal article in the show notes below. Uh, you can also connect with us on LinkedIn, YouTube or on our website. And if you have ideas or suggestions on what you'd like to hear in a future episode, or if you'd like to be a guest, please just shoot us an email@inforoductinhealthtech.com. Sam.