Former OptumRx CEO jumps back into pharmacy with Waltz Health
Former OptumRx CEO Mark Thierer has reentered the drug pricing fray, launching a new startup called Waltz Health that lets users search for the lowest-cost medications with $35.4 million in Series A funds.
"We are working with the system, not against it," Thierer tells Axios.
Why it matters: Pharmacy benefits managers, or PBMs, are the newest four-letter word in health care, and startups are coming out of the woodwork in recent months to compete with them.
- Those include SmithRx, which in March filled a $20 million Series B round led by Venrock with support from Founders Fund at a $100 million valuation, Axios reported exclusively.
Flashback: Thierer became OptumRx CEO after selling his company, a pharmacy benefits manager called Catamaran, to UnitedHealth Group in a blockbuster $13 billion deal.
Details: The funding for Thierer's new venture, which he started with son Jonathon Thierer, comes chiefly from GV.
- Define Ventures, Echo Health Ventures, Blue Venture Fund (the VC arm of the Blues plans) and others also participated in the round.
Be smart: The Big Three dominant PBMs are CVS Health (Caremark), Cigna (Express Scripts) and UnitedHealth (OptumRx).
- They command nearly 80% of the market and control drug prices while acting as brokers between insurers and consumers.
- Dominant PBMs "exploit the ambiguity of pricing and loosely-defined contracts," according to Antonio Ciaccia, a pharmacy sector analyst and the CEO of research firm 46brooklyn.
How it works: The company's first application is called Marketplace Search and lets users price shop for medications.
What Thierer is saying: Despite some marked changes in the pharmacy supply chain over the past 30 years, there's been little transformation in the process of rebates or price reductions.
- "In some areas, the change has been massive — for instance, the percentage of drug spend for specialty medications is so much greater than it was 30 years ago," he says. "In other areas, change has been on the margin — for example the process of manufacturer rebates in exchange for formulary placement is still relatively the same."
Our thought bubble: Waltz reminds us a bit of GoodRx, which also lets users compare drug prices and find coupons — and it works at over 60,000 U.S. pharmacies.
What's next: Thierer sees his company partnering "across every facet of the health care industry," including with PBMs, insurers and pharmaceutical companies.