By Sy Mukherjee
October 2, 2018

Digital health startup Blink Health will now provide customers free home delivery for its prescription drug service, which offers thousands of commonly used treatments at hugely discounted prices, the company tells Fortune.

Blink Health co-founders (and brothers) Geoffrey and Matthew Chaiken were part of Fortune‘s most recent class of 40 Under 40 entrepreneurs. The company’s aim is to offer an e-commerce based solution to one of America’s most persistent and controversial medical problems: The staggering cost of prescription drugs.

“We provide Americans access to significant savings on their prescriptions, and now we’re offering another convenient way for getting their medications filled,” said Blink Health co-founder and CEO Geoffrey Chaiken in a statement announcing the new home delivery option. “We’re adding home delivery because modern retail requires consumer choice and the integration of online, physical retail, and delivery.”

Up until now, the service has worked as a free pickup model: You could search for whatever prescription you needed through Blink’s site or app, select your preferred low-cost deal on the medicine, and then have it filled at a local participating pharmacy for later pickup. The new offering allows shipment straight to a customer’s home. (There are no associated membership fees for the service.)

 

Courtesy of Blink Health

The basic idea behind Blink Health is to bypass middlemen in the drug supply chain—such as pharmacy benefits managers (PBMs) and insurers—in order to cut deals on prescription medications (and specifically the generic drugs that the vast majority of people use). That process can save customers money while also offering incentives to participating pharmacies, according to the firm—of which there are more than 33,000 local ones, including major chains like Albertsons, Kroger’s, Safeway, and Walmart.

Pharmacy benefits managers like Express Scripts and others have come under scrutiny in recent years (including by Congress and the Trump administration) for their potential role in driving up drug prices. Such companies negotiate discounts with drug makers on a medication’s list price; but critics point out that these negotiated discounts largely line PBMs’ pockets without passing much in the way of savings onto consumers.

So, Blink’s strategy is to simply cut out the go-between with the help of tech and negotiating power. It offers participating pharmacies an assured rate in exchange for negotiating lower prices. The system intentionally doesn’t accept insurance but can still provide consumers with a lower out-of-pocket cost for their prescription meds, whether they be common cholesterol, diabetes, or other drugs.

 

Courtesy of Blink Health

CEO Geoffrey Chaiken and other Blink Health executives Fortune spoke with were harshly critical of the PBM industry (CVS and Walgreens, two retail pharmacy giants, have cut ties with the company). Which adds some irony to the fact that one of Chaiken’s major coups was getting Susan Lang, a veteran and senior vice president of Express Scripts, to join what is in many ways the enemy.

“For a long time, PBMs really had a critical space,” says Lang, who is now the chief strategy officer at Blink Health. “The motto at Express was: Make drugs safer and more affordable. By the time I left, I think that was dramatically starting to change. Those incentives weren’t aligning anymore.”

Chaiken also enlisted the likes of Robert Birge, the former chief marketing officer at Kayak and all-around e-commerce whiz, as Blink’s own marketing chief. Between Lang and Birge, Chaiken has assembled an eclectic team that has a grasp on the pharmaceutical supply chain and the ins-and-outs of digital commerce alike—which may also explain why Blink’s intriguing progression.

“Our view is that this needs to be a multi-channel strategy,” says Chaiken. “We started as the opposite of a lot of other people… We started with retail, in-person pickup, and then went online and home delivery.”

Given the highly personal—and medically critical, often time-sensitive—nature of picking up prescriptions, the strategy may prove noteworthy.

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