The Prescription for Prescriptions’ Pain Points

18. September 2017.








No one likes to wait in line – especially when they are sick. Thus, why not eliminate what is a literal pain point in commerce: waiting in line at the drug store?

In an interview with PYMNTS’ Karen Webster, Deepak Thomas, CEO and founder of Phil, delved into a huge market that brings with it a daunting task: How to eliminate the wait and worry that comes with wanting to know if medication, perhaps urgently needed, is in stock when needed?

Data Point Number One: $580 billion to $610 billion

That is the range for how much U.S. consumers actually pay for prescription drugs each year. As the executive noted, quite a bit of that range – to the tune of $400 billion – gets spent on prescriptions outside of hospitals (such as outpatient prescriptions), picked up, for example, at a chain drugstore. The ritual, as Webster noted, is to show up at the drugstore, pick it up and take it home. But then again, the picking up and the taking assumes that the pills, or the inhaler, or the cream, is in stock.

So, against this procurement backdrop, what is Phil trying to change? Amid the urgency of, say, treating a sinus or other infection in a “one off” illness, patients are likely to put themselves through the chain drugstore experience, with friction in place along the way.

Think of the wait times that mount as prescriptions are filled or drugs are not in stock. The local pharmacy may not take care of the back-end paperwork in a timely manner, leading to further delays. Repeat visits may be in order. Literal shopping cart abandonment may take place, but we’ll get to that in a moment.

On the other side of the coin is treating chronic conditions, such as high blood pressure or diabetes. In terms of transactions, said Thomas, the recurring ones are about four times more in volume, which means better revenue streams for the druggists. This is where the key demographic for Phil and its app lies: people in their 40s through 60s who suffer from chronic ailments and need medication on a frequent basis. They are in their working prime, said Thomas, and do not want the hassle of waiting to get what they need.

“The process of procuring a consistent supply of these medications can often be daunting,” said the executive. In many cases, the patient has to navigate between the doctor, the pharmacy and the insurance company to ensure that meds do not run dry, so to speak. The company seeks to coordinate across these disparate groups, and deliver the guarantee that medications will show up on the doorstep at no additional cost to the patient. Copays are done through the company’s app.

Data Point Two: 22,160

There are 22,160 independent pharmacies across the U.S., but as Webster said, the health plans tell customers to go to the big chains.

The patients who make a beeline for the “big boys” may be missing out, though. “The independents are known for their higher quality of service,” said Thomas, with those establishments garnering high ratings across most of the country’s large metropolitan areas.

Service makes all the difference, because at the end of the day, the product – the drugs themselves – is the same. The independents, he said, will work with patients and doctors to ensure continuum of care at the lowest possible price point, as copays are also uniform across pharmacies, whether they’re large or small.

A core advantage for Phil and its users, as defined by Thomas: Picture the road warrior, felled by stomach cramps or something else during a sojourn, hunting out new revenues for the employer. In essence, picture being stranded among strangers.

According to Thomas, his company has independent pharmacies in place, so there’s a good chance that a traveler is very close to at least some establishments within the company’s network.

Then, the user opens up the company’s site or app and lets the agents know what they need, and how much. The company is then able to meet the medicinal needs of the stranded person within the day, delivering a “tide over” supply of the medicines to the hotel or Airbnb. In the meantime, the firm makes use of one of the more valuable aspects of the neighborhood druggist: delivery, as four out of five independent drug firms offer a drop-off service.

Phil gets paid for the software in place with the independent players, as the companies recognize the value of increasing foot traffic (and dispensing activity, of course).

Thus, Phil sidesteps some of the issues that handling controlled substances might present, noted Webster. The firm does indeed fill at least some of those prescriptions, but he noted that “we never touch or see the medications” themselves, as they are sealed and tamper-proof.

Data Point Number Three: $100 billion

That’s the cost of medication “non-adherents” where individuals cannot afford to get medication filled in the first place, or subsequent prescription refills. The adherence question, said Thomas, remains “front and center.” One cannot take the medication that they do not have in hand. The chain experience has a median wait time of 60 minutes, and some may feel reluctant to wait in line or endure multiple visits should a medication be out of stock … and thus, they abandon the process altogether.

And as we all know, at times, the drugs we need are anything but cheap. “We help with the cost,” added Thomas, as Phil monitors the pricing in the marketplace, the gulf between copays and the cash cost of drugs not covered by health insurance. If there are changes – such as a co-pay going up, for example – Phil will “translate insurance speak into plain speak.”

In addition, the company will find out if there are coupons available to help defray the costs, or will contact doctors to pinpoint any generic or other options. “The action needed on [the patient’s] end,” said Thomas, is one “of pressing a button.”

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