Dr. Ralph F. Kalies, founder of BidRx, explains how changing the traditional business model in the pharmacy industry can help lower costs.
Organization Overview: BidRx® creates a competitive electronic marketplace (CEMTM) for medications that allows patients and providers to engage in active, transparent commerce on-line and in real time. The model fosters head-to-head, value-driven competition among providers and teaches patients to become smarter healthcare consumers by comparing prices - just like they do for food, cars, clothes and houses.
Bio: Dr. Ralph F. Kalies founded BidRx® in 2004 and serves as chief executive officer. Dr. Kalies has a distinguished career in pharmacy and business, and continues as one of the foremost experts in pharmacy practice worldwide. Dr. Kalies earned a BS in Pharmacy at the University of Wisconsin, School of Pharmacy, and a PhD at the University of Minnesota, Graduate School of Pharmacy.
Summary of Experiment
The traditional business model for health care is wrong. Transparency and competition are absent, and we've seen what this results in: skyrocketing costs with no end in sight. The trend is not going to change without a new model for purchasing health care, and BidRx wanted to help lead that effort.
Instead of a provider-centric system based on paying billed charges calculated after-the-fact, BidRx® brings buyers and sellers together through an interactive, transparent online auction process, similar to the eBay model. After inputting the necessary prescription information from their physician, patients can select the option that best fits their pharmacy needs from a price list of competing providers.
Patients win by regaining control and paying lower costs. Providers win because efficiency and excellence are rewarded.
See the CEM model in action with our demo.Key Challenges
Transforming an entrenched business model takes time. We're still exploring the best mix of incentives that actually change consumer behavior. Benefit designs also need to be innovative so consumers shop and compare before they buy. We've experimented with new benefit options designed specifically for BidRx.com, and they are starting to change consumer purchases and lower costs.
Lessons Learned
Change is hard, and big change is harder. New payment models are often perceived as a risk by buyers. Therefore, BidRx® searches for clients among young, hungry employers who take risks every day they open for business. Decision-makers at established brand name businesses, although generous with their time, are often uncomfortable with disruption. Tough jobs require passion, patience, and an unswerving belief in success by doing the right thing is the fuel for loyalty and passion.
Next Steps
We'd like to get every benefit sponsor onboard to offer BidRx® as a tool to help members make better purchasing decisions. We have a long path to achieve that goal. We also see opportunities to apply the BidRx® business model - a Competitive Electronic Marketplace (CEMTM) - to other health care products and services as well.
Real World Impact
See what Center board member and Wisconsin business owner John Torinus has to say about his company's BidRx® experience:
"BidRx has done for drug purchasing what Amazon did for purchasing books, that is to make it easy to understand and easy to order...I asked [them] to pull up a specialty drug for arthritis, for which we were paying $7, 000 per month for an employee. One retailer offered to fulfill that order for $518.54 per month."
Read the full post here."After some lab tests, the doctor gave Kathy a new prescription. When we returned home, we looked up the new prescription on BidRx. A 90 day supply was well over $300. So we did some research through BidRx and looked for some alternatives. Kathy presented a list of alternative drugs to her doctor and ended up with a drug that would cost $15.80 for 90 days. The doctor basically said she had no way to know what prices were and what alternatives were available."John"Since turning 65 my health insurance took a downturn. I ignorantly ordered a 90 day refill for Simvastatin from Medco and later learned the cost to me was circa $80. Saturday, I checked with my local Shopko Pharmacy what my out of pocket cost would be for a 30 day supply of Sertraline and found the total cost was $38, of which I would have to pay $34. I said okay fill it, and then I came to my senses and checked BidRx. I immediately canceled the Shopko refill request and called the Omro Pharmacy which I had used a few years ago through BidRx. The pharmacy was closed so I called them again yesterday worked out my order, had them retrieve the prescription from Shopko and it was in my mail today at a total cost to me of $6.10. Thank-you BidRx!"Stan
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