Axios Pro Exclusive Content

Exclusive: Specialty pharmacy enabler Free Market Health raises $14M

Erin Brodwin
Apr 19, 2022
Illustration of a pill bottle with a hundred dollar bill for a label

Illustration: Sarah Grillo/Axios

Free Market Health, a Pittsburgh-based maker of specialty pharmacy routing technology, raised $13.5 million in Series A financing led by Alta Partners, CEO Joe Cardosi tells Axios exclusively.

Why it matters: Specialty medications present a special hassle since insurers dispense the majority of such drugs, often on a delayed basis and without coordination with providers.

  • Specialty drugs — often used to treat complex and severe diseases — are often expensive and take weeks to obtain, something some clinicians have suggested may be linked with poorer health outcomes.

How it works: Free Market uses a cloud-based platform to match specialty drug referrals to the most appropriate pharmacy, based on data on the drug, prescriber, patient and therapeutic category.

  • "We call it a care-driven marketplace. It brings together specialty drug providers, home infusion providers and payers," says Cardosi. "The goal, the mission, is to never let the process fail a patient."
  • The company serves payers and pharmacies and charges a per transaction fee for its services.

Context: Founded in 2019 in Pittsburgh, Pennsylvania, Free Market is among a fresh crop of startups trying to streamline the process of getting medications to patients. For example in March alone:

  • House Rx, which partners with specialty clinics to streamline care and medications, raised $25 million in Series A funding led by Bessemer Venture Partners, Axios reported exclusively.
  • SmithRx, which runs claims through algorithms seeking lower-priced medications, filled a $20 million Series B funding round led by Venrock with support from Founders Fund, bringing its valuation to $100 million, Axios reported exclusively.

Yes, and: For large incumbent PBMs, specialty drugs tend to be highly profitable, but if Free Market can prove it adds value, they may be willing to collaborate.

  • "The way [Cardosi] conceived of this model, they have an opportunity to partner with every entrenched vendor in the space," says Alta Partners managing director Pete Hudson.

Details: Existing Free Market backers Highmark Ventures and 653 Investment Partners also joined the round.

  • Free Market plans to use the funds to hire and scale, says Cardosi.
Go deeper