Startup pharmacy benefit manager Capital Rx is teaming up with Walmart to bring greater transparency to specialty and mail-order prescriptions.
Capital Rx provides PBM services to employers and health plans through its “clearinghouse” model, in which they provide unit costs for drugs upfront to clients. The model is also designed to prevent “spread pricing,” in which a PBM charges a payer significantly more than a pharmacy’s price for a drug to reap profits.
Joining up with Walmart, a company that was early to sign on with Capital Rx, makes the PBM the first to offer that price transparency across retail, specialty and mail-order medications.
A.J. Loiacono, CEO of Capital Rx, told Fierce Healthcare that traditionally employers or other PBM clients will sign on without any sort of upfront pricing information.
“You have a 50- or 100-page contract and traditionally, it just has words,” he said, “and we don’t buy anything else in the United States with words, we buy with prices.”
Walmart was the right partner to bring that thinking to specialty and mail-order drugs, Loiacono said, because of its massive retail reach and willingness to offer unit price to consumers. He said the two companies also aligned on their customer service approach.
Walmart purchases billions of dollars in drugs per year, he said, offering essentially “unlimited scale” for price transparency, Loiacono said.
“‘Everyday low price’ has been a guiding principle at Walmart,” said Luke Kleyn, vice president of Walmart Health and Wellness, in a statement. “We take pride in providing affordable prices to more than 160 million customers who shop at Walmart each week. Working with Capital Rx will allow us to do the same for prescription drugs.”
Capital Rx’s approach has also attracted investor backing—the PBM secured a $12 million funding round led by Edison Partners that spurred it to launch its “clearinghouse” model last fall.
Loiacono said there’s especially room to bring greater transparency to specialty drugs, which are a growing piece of overall drug spend and a significant concern for payers and employers moving forward.
Drugs also change prices many times over a year, and traditional PBM contracts can significantly benefit some clients and hurt others, he said.
“We remove all of that—there are no more winners and losers,” he said. “It’s the same for everyone.”