Welcome to RxAdvance! We are committed to redefining the PBM value proposition to plan sponsors and disrupting antiquated traditional paradigms in the decades-old PBM market.
To provide a little background, I founded ikaSystems in 2000 as my third venture through which we developed an Enterprise Payer Cloud Platform that reduced administrative costs and avoidable medical costs for health insurance companies. In 2009, Providence Equity and Essex Woodlands invested over $140mm in ikaSystems. The company had grown to over 400 employees, serving 35 payers with over 30 million member lives. Through our platform, we were able to reduce medical costs significantly and administrative costs by 50%, which is unheard of in the market, for health insurers such as BCBS Michigan. Recently, ikaSystems was acquired by BCBS Michigan. After building ikaSystems for 12 years as a founder, CEO, and Executive Chairman, in February of 2013, I stepped down from ikaSystems, as I saw another significant cost reduction and quality improvement opportunity in the PBM industry. As you may already know, the PBM industry is an industry that has long been awaiting innovation, as it is encumbered with huge administrative inefficiencies, obsolete transaction methodologies, legacy systems, limited service offerings, and a lack of a single point of accountability.
Traditional PBMs only manage $370 billion drug spend, while RxAdvance defines the actual addressable PBM market as much larger than this. RxAdvance’s services are designed to target an $840 billion market opportunity, comprised of this $370 billion drug benefit, plus $120 billion in specialty drug management, plus an additional $350 billion market in managing avoidable drug-impacted medical costs. RxAdvance consistently proved that, if a health plan was using one of the top 5 PBMs in the market, our services could reduce pharmacy spend by 10-12%, specialty drug spend by 10-15%, and avoidable drug-impacted medical costs by 20-25%.
Today, we spend nearly $3 trillion dollars on healthcare, and these costs are continuing to spiral to unsustainable heights. Of this, over $700 billion are avoidable medical costs; half of which are due to physician and hospital abuse, misuse, and incompetencies; and the other half of which can be classified as avoidable drug-impacted medical costs. In other words, by administering the drug benefit comprehensively, these costs can be substantially reduced. Half of these savings are more than enough to fund the uninsured and underinsured, while also reducing premiums for all Americans.
A month after leaving ikaSystems, I founded RxAdvance as a full service PBM, and built the Collaborative PBM Cloud™ platform to run RxAdvance efficiently and collaboratively with insurers. RxAdvance brings the highest degree of sophistication through the Collaborative PBM Cloud™ to deliver actionable intelligence throughout the care continuum: to prescribers at the point of care, pharmacists at the point of sale, patients via the mobile cloud, and plan sponsor clinical/pharmacy staff within their workflows. In late 2015, after two years of platform development, RxAdvance began actively marketing our PBM services to plan sponsors. In October of that same year, Avera Health Plan awarded a full-service PBM contract to RxAdvance, which went live in January of 2016 in record onboarding time.
Since inception, RxAdvance has worked tirelessly to fit the diverse needs of plan sponsors, and in doing so has defined three unique service offerings: nirvanaRxCloud™, our cloud-based, full-service PBM solution that can replace traditional legacy PBMs; nirvanaAccountableCare™, a risk-sharing solution to reduce avoidable drug-impacted medical costs; and nirvanaSpecialty™, a solution to convert specialty drug treatment management from “Buy & Bill” to “Authorize & Manage”. Both nirvanaAccountableCare™ and nirvanaSpecialty™ will complement a plan sponsor’s existing PBM.
RxAdvance operates with 50% lower administrative costs than any legacy competitor. As a result, RxAdvance can offer contracts with zero administrative fees, lower ingredient costs, and higher rebate payback to plan sponsors under the spread model. This also allows RxAdvance to offer all services under one flat administrative fee under the pass-through model. Both models offer complete transparency to plan sponsors.
I welcome the opportunity to explore a mutually beneficial partnership and to disrupt the existing PBM status quo with your organization!
President and Chief Executive Officer