Why an Amazon and Airbnb vet joined a digital health company that wants to slash drug prices

August 24, 2020, 7:30 PM UTC

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Geoffrey and Matt Chaiken have an ambitious plan to lower the price that consumers have to pay for their prescription drugs. And they’ve enlisted the help of a prominent player who’s both an Amazon and Airbnb veteran to help achieve their mission through his knowledge of the interplay between consumers and technology: Vinayak Hegde is now the COO and president of the Chaiken brothers’ company, Blink Health.

While Blink made their announcement about Hegde’s appointment earlier this month, this is the first time that Geoffrey Chaiken, and Hegde himself, have spoken with a media organization.

The prescription drug business is pretty bizarre. It’s a maze of supply chain components that are largely obscure, and the consumer doesn’t really know what they’ll have to pay. Out of pocket costs depend on your insurance, and on the various middlemen—including pharmacy benefits managers (PBMs), pharmacies themselves, drug distribution companies, and all sorts of other players—which have the ability to hike up prices. The grand irony being that they all blame each other for, well, who’s to blame.

What Blink Health set out to do, as Fortune has previously reported, is bypass the middlemen who make drugs more expensive. But in the past few years, they’ve changed strategies, Hegde and Chaiken tell Fortune, including by leveraging the large market of Americans who have health insurance. In essence, what they’re striving for is to scale a business model—with a relatively limited audience—that the company claims can cut prescription drug costs by as much as 80 percent.

“I think I can make a difference to expand health care to a massive amount of people,” says Hegde. “And they are set up in a place where we can actually make that set scale in terms of like, you know, helping patients who have insurance and helping patients who don’t have insurance dramatically make a difference to their outcome.”

It’s no secret that prescription drug costs in the U.S. are among the highest in the world. Politicians ranging from President Donald Trump to former Democratic nominee Hillary Clinton to current Democratic nominee Joe Biden have all vowed to take action that will lower the out-of-pocket costs paid by Americans for their prescriptions. Some proposals, such as both Trump’s and Biden’s recommendations that programs like Medicare have the power to directly negotiate the price of drugs, have been more aggressive than others. But none have actually been enacted.

Hegde has had an interesting transformation over the course of his career. A 12-year veteran of Amazon, and a technology professional at heart, he eventually went into the marketing side of business. He was one of the head honchos for Groupon’s marketing group. At Airbnb, he was the chief marketing officer for the global homes business and tasked as a VP of growth for the entire company.

What this adds up to is: Hegde is a pupil of the school of supply and demand, and the way in which certain regions have very specific needs—and, most significantly for Blink, the ability to scale. When it comes to prescription drugs, that’s a critical skill.

“Six days after I joined Amazon, an analyst from Lehman Brothers said, like, Amazon will run out of money and die,” says Hegde. “So I spent one and a half years at Amazon doing a bunch of things such as launching the third party business in the U.K. and Germany, launching payment systems, allowing people to use their bank accounts.” He then continued to build out strategies for turning Amazon’s original functions as a provider of a catalog of goods into a more comprehensive web services provider linked to those very goods.

Such systems may seem commonplace today within e-commerce, but they form the very backbone of digital health companies. Turning an industry like prescription health care, which has historically been an in-person service system at, say, your local pharmacy, into a scaleable but convenient business takes knowledge of technology, logistics, and marketing.

“When you have such a huge market, the obvious question is, you know, like why hasn’t this been cracked?” says Chaiken. “And the basic reason for that is that it’s an incredibly complicated problem to solve. And the problem I’m talking about solving is getting patients the lowest price on their prescriptions and giving them control and agency over their prescription so they can control where it’s built.”

While Blink began by catering to those who didn’t have insurance, or didn’t want to use insurance in order to purchase drugs, the new plan—and part of what Hegde was hired to propel—is expanding into a network of insured patients. It boils down to this: The nexus of e-commerce and direct delivery of both generic and branded medications could significantly cut costs for American patients—if they can crack the code.

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