Capital Rx is a winner of FierceHealthcare's Fierce 15 awards. See our other honorees here.
For two decades, A.J. Loiacono has tried to change how drugs are priced in the U.S.
The big idea: A next-generation pharmacy benefit manager that aims to leverage technology to simplify drug pricing.
Headquarters: New York, N.Y.
Launched: December 2017
CEO: A.J. Loiacono
Latest milestone: At the beginning of the year, Capital Rx launched two major products aimed at helping customers manage drug spending. The first product JUDI is a cloud-based claims processing platform intended to help employers with greater visibility into drug costs and trend patterns. The second product launched in August and as a Capital Rx prescription drug discount card called Advantage. The goal of the card is to pass savings onto consumers with no additional costs and aims to save up to 90%.
Goal for 2022: Capital Rx hopes to grow its customer base and continue to maintain its 100% client implementation satisfaction and retention rate.
Total funding to date: $69 million from Transformation Capital and Edison Partners
Number of employees: Capital Rx increased its headcount from 100 in 2020 to 285 in 2021.
The CEO of the startup Capital Rx has seen up close the drug supply chain where drug makers sell to wholesalers that then sell to hospital systems and supply chains.
“Then you get to the last hop in the U.S. supply chain and everything breaks,” he told Fierce Healthcare.
Employers have contracts with pharmacy benefit managers that have traditional contracts of 50 to 200 pages “with terms and definitions, not a single drug price in it,” he said. “When I started to read these payer agreements, I felt foolish. We don’t get drug prices but have averages over time and complex definitions that can change from payer to payer.”
So in December 2017, Loiacono co-founded Capital Rx, which aims to make a more efficient marketplace for drug prices thanks to new technology investments.
“We invested heavily in technology to create that efficiency because you want to offer prices at the lowest price point,” he said.
In the past year, Capital Rx has launched several products aimed at giving employers greater transparency on drug prices and cost patterns.
Fierce Insights from A.J. Loiacono, CEO of Capital Rx
What is your best piece of advice for launching a healthcare company that challenges the status quo?
Prepare to be disappointed. Just because you see the world through the appropriate lens and understand how to make the world a better place, there are people in the existing health ecosystem that are really OK with how the world works today. If you are prepared the water is cold, it won’t feel as cold.
There are people that may not support your business model either in a cadence that you would like to happen, which is today. You also want to try to find partners that want change.
What is the failure you’ve learned the best lesson from?
This is my third company now in the health technology and pharmacy supply chain. I often say there are so many to pick from. You bump into furniture in the middle of the night and a good entrepreneur says “I don’t want to do that again so where was the coffee table and where was the couch?”
The lesson I learned that goes hand in hand with disappointment is patience. With health technology, you are truly changing the status quo and want to change the way something works at scale in any industry. My biggest lesson is patience.
What is the book you recommend to other healthcare leaders?
"Meditations" by Marcus Aurelius. It probably has so many life lessons you won’t know this book was written close to 2,000 years ago. It is important to remember a lot of these lessons.
It is a reminder that we are dust in the wind. Is that important? I think it keeps you levelheaded but also realistic with not just your clients but also your colleagues.
I think these are lessons entrepreneurs need to be reminded about all the time. It is such a quotable book.
What is the biggest change to watch for in the healthcare industry in 2022?
We’ve talked about in the industry for so many years, when is the big change happening and when is healthcare going to really do something different? I think it begins in 2022.
You have this convection point of what I talk about is the largest amount of capital being deployed in healthcare on a scale no one has ever seen before. When I started in health IT, I went to 20-30 [venture capitalists] and they said healthcare? Why? Very few funds were healthcare-focused. What has happened in that time is, you see this great explosion in the capital side.
I see 2022 being the beginning of the great change, the beginning of everything as we know it in healthcare starting to change. I think this is healthcare’s wakeup.
What advice would you give to healthcare leaders seeking to make a real impact on health equity?
The goal for any modern health care company is to improve some function of care delivery, from operational efficiency to clinical outcomes. However, as innovators, we have an incredible opportunity to remove disparities in care. We share a responsibility not to squander the clean slate we are given and address inherent gaps in health equity that are sustained by the status quo.