Editor’s note: Startland News selected the top Kansas City firms to spotlight for its annual Startups to Watch list. The following is one of 2018’s companies. To view the full, ranked list of Startups to Watch, click here.
When it comes to U.S. prescription drugs, it appears there’s one certainty: Prices are going up — way up. That presents an opportunity for startups like Rx Savings Solutions.
In 2017, U.S. citizens spent about $340 billion on prescription drugs, up 28 percent from 2013, according to the U.S. Centers for Medicare & Medicaid Services.
And, unfortunately for drug buyers, prescription costs are expected to continue their surge. Spending on prescription drugs is forecasted to reach $580 to $610 billion by 2021, according to QuintilesIMS, a data firm for the pharmaceutical industry.
Such surging costs are not only creating a pain for consumers but opening the door for companies with the technology to help. Overland Park-based Rx Savings Solutions saves consumers and employers money on prescription drug costs with an price comparison tool that evaluates and compares drug prices.
Ultimately, Rx Savings Solutions hopes to empower its users through a better understanding of the market, said Michael Rea, CEO of Rx Savings Solutions.
“It’s an Expedia-like approach to boil down the complex world of prescription drugs, their pricing and the clinical options to manage a medical condition,” said Rea, a former pharmacist. “We do all the work to make it simple and actionable for members to be their own advocates when it comes to health care decisions.”
Searching for savings? It pays to shop, Rea said. A particular drug’s price can vastly fluctuate from one pharmacy to the next — sometimes by 1,000 percent, according to the firm.
With Rx Savings Solutions, a user saves an average of nearly $300 per year on prescriptions, Rea said.
And for employers, savings are even more significant. On average, employers are overspending by 22 percent, which can account for hundreds of thousands of dollars in savings. In the case of the BH Media Group, the firm saved more than $1.3 million over two years, according to Rx Savings Solutions.
Such success stories are catching the market’s attention.
Rx Savings Solutions membership has soared in the past two years, climbing from 100,000 members in 2015 to what will be 2 million people served by Feb. 1, 2018. Rea doesn’t plan to slow down either, setting a goal for the firm to reach 5 million users by the end of 2018, he said.
As the firm continues to grow through the U.S., it plans to continue adding more Fortune 500 employers and health plans to the platform, Rea said. Sprint, the State of Kansas and Quest Diagnostics are among many large employers already using Rx Savings Solutions.
With that growth, Rea expects to grow revenues more than 100 percent from 2017 numbers. The firm also recently took on a $18.4 million round of capital, which should help accelerate growth.
But beyond the promising numbers, Rea’s and his team’s passion sets the firm up to become one of Kansas City’s next big startup successes.
“At the end of the day, I started the company to help more people,” Rea said. “How do we save people money on drugs and make their life easier in this otherwise very complex space? The way that we do the most good is to have more people using the software, and that can keep money in their pocket, they can have time back with their families and overall live a better life.”