The online pharmacy eliminates insurers

Satish Srinivasan wants to exclude insurance from direct involvement in prescription drug purchases.

Srinivasan is the founder and CEO of DiRx, a 2-year-old company based in East Brunswick, New Jersey, which runs an online pharmacy. The site serves customers who use their own money — not health insurance — to pay for their prescriptions.

For a typical agent or advisor, customers interested in a cash-only pharmacy might be those using a high-deductible health insurance policy, with or without a health savings account, to limit premiums.

Some of these clients may already be receiving primary care from “pay-direct” or “cash-only” medical practices that avoid connecting patients with their health insurers.

Customers who are comfortable submitting prescription claims to insurers themselves can also shop at a pharmacy cash-only, and in many cases may be able to get at least some reimbursement. for DiRx purchases.

Srinivasan holds a bachelor’s degree in pharmacy from the University of Mumbai and a master’s degree in pharmacy from the University of Illinois at Chicago.

He entered the pharmaceutical industry in 1994, as North America Territory Manager for Orchid Chemicals and Pharmaceuticals. He went on to lead Orchid’s generic drug sales unit in the United States, and then led the US distribution arms for other non-US drugmakers.

He started DiRx in 2020. As the manager of an online pharmacy, he has a keen awareness of the true cost of drugs.

He answered questions about prescription prices via email. The answers to the questions in this interview have been edited.

THINKADVISOR: How do you think the insurance industry is contributing to rising drug cost inflation?

SATISH SRINIVASAN: In addition to adding the cost of administering insurance to the equation, since reimbursement is based on a “reference price” and not the actual cost of acquiring a product, system intermediaries find it convenient to maintain that high reference price even when the cost of the product decreases over time and pockets all the margin in the middle.

Do you think there are other culprits?

The usual suspects are traditional pharmacy benefit managers (PBMs) and “Big 3” drug wholesalers (especially in the case of generics, which account for 90% of prescriptions). They control the distribution chain and decide which product enters the supply chain at what price, while keeping the system “pricing” tied to the reference price for reimbursement.

How do you propose to try to fix things?

From a generic prescription perspective, we have tried to disrupt both of these distribution layers (wholesalers and traditional PBMs) by sourcing products directly from manufacturers and making them available directly to consumers without the need for insurance.

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