NowRX CEO: Why DTC Pharmacy Is An Easier Pill For Consumers To Swallow

Large pharmacy chains selling mixed merchandise are a mainstay of life throughout the developed world.

Familiar planograms with the pharmacy in back, pulling shoppers through rows of candy and cosmetics to get their medicine is an everyday routine.

Or it was.

Big Pharmacy’s reliance on the sale of non-pharmacy products — a strategy that’s worked for years — may now be an Achilles’ heel in a post-pandemic battle for prescription drug market share, where waiting on pharmacy lines with sick people is out of the question for millions.

Pointing to Walgreenspact with VillageMD, NowRX Co-Founder and CEO Cary Breese told PYMNTS CEO Karen Webster, “There’s an entirely new dimension to delivery pharmacy and healthcare. There’s obviously been a brace of telemedicine. It’s something we’ve talked about for years … and now it feels to me like it is actually going mainstream.”

Disintermediating powerful national retail pharmacy chains with a direct-to-consumer (DTC) play on prescriptions is Breese’s obsession, intensified by the extraordinary events of 2020.

“[Chain pharmacy] strategy is built around an in-store pickup model, so while they could do delivery pharmacy, they don’t want to. Their incentives are reversed,” Breese said, referring to lures that drive retail foot traffic into big-box pharmacies to increase purchases.

“It’s core to their profitability, and I think they’re misaligned,” he said. “It’s a destination model, and that’s counter to the way customers are trending … in a post pandemic world.”

With people already minimizing their exposure to physical retail in all forms, the DTC prescription push has been gathering steam by closing the “last mile” with home delivery. It dovetails with the larger telehealth trend that’s taken wing since COVID-19 arrived.

Fixing Pharmacy

Well-financed players are steadily expanding the DTC Rx space, from Amazon’s PillPack to Truepill to startups like ePharmacy Ro — now valued at $1.5 billion — with its DTC brands Zero (nicotine addiction), Roman (men’s health and erectile dysfunction) and Rory (women’s health), to name a few. As independent mom-and-pop pharmacies all but disappear, NowRX and its rivals are recreating some of that warm personalization, losing the worst aspects of pharmacy.

Relating a story about once getting a prescription and being struck by the sheer inefficiency — going to a doctor, going to a pharmacy, waiting in line to drop off the prescription, returning to said pharmacy hours later to wait again to pick up the prescription — Breese said he knew there had to be a better way.

The NowRX team set about fixing “…all of those bottlenecks, the interactions with insurance plans, communication with physician, [automating] all of that [and using] robotics so you don’t have humans counting out pills,” he said, invoking the universally-despised pharmacy wait.

Put another way, consumer experience (CX) is the ultimate arbiter. Automated delivery pharmacy is looking to achieve CX with contactless convenience more aligned with pandemic-era sentiments.

“It goes through insurance without a hitch, we coordinate with your physician without you having a lift of finger, we fill that prescription within minutes, and we give … free delivery right to your home,” Breese said. “That’s a better model.”

That “better model” will remain proprietary, as Breese doesn’t foresee licensing NowRX tech to hospitals or even the mega pharmacy operators.

NowRX acquires new customers for its cutting-edge platform with some old-school techniques. Company reps visit physicians, explain the benefits of the delivery pharmacy, especially for elderly and at-risk patients, after which the doctor recommends the platform to patients.

“We actually save physicians time, as well as giving their patients a better experience, and that can have financial implications for them as well through better health outcomes, reimbursements and star ratings,” Breese added.

An Easier Pill To Swallow

If not for the pandemic, online delivery pharmacy might have languished for years. Now, venture capital is moving in, backing best bets before what may be an inevitable consolidation for the sector. Mergers and acquisitions (M&A) are not the route NowRX is taking, however.

“Our plan…is [to do an] IPO in three to five years,” Breese told Webster. “We think we can get to hundreds of millions in revenue, if not a billion revenue.”

The success of such an IPO (initial public offering) will partly depend on the health of the existing retail pharmacy network. Things may get rough for them.

At some point, Breese said he believes, the loss of revenue from non-pharmacy goods will force large chains to break up their business models or risk becoming irrelevant under a new model.

Another wildcard is Amazon and its disruptive ways.

“I think Amazon’s going to come up with a two-day free delivery model pretty soon,” Breese said. “That’d be my expectation. I look for Amazon to put that kind of pressure on the industry, and I think then you’ll see Express Scripts and Caremark and the big mail delivery pharmacies having enormous pressure on them to change their model or perish.”

And telehealth will begin to yield enormous commercial clout in a short time, which will change not only pharmacy but the delivery of healthcare more broadly.

“I am seeing more activity currently on the health systems that are saying, ‘We want to control this whole process. We want … telehealth. We want to own the pharmacy,’” Breese said. “I think a lot of the pharmacy industry’s going to move away from independence into a health system-based, fully integrated model that’s been built specifically around a remote telehealth environment.”