On-line Rx market opens for business

September 18, 2006

Tom Kellenberger wants to do for pharmacy what Expedia, Orbitz, and Travelocity have done for travel: Blow the market wide-open. In late May, the Wisconsin pharmacist flipped the switch on BidRx (www.bidrx.com), an on-line marketplace for prescription drugs, over-the-counter products, and pharmacy services.

Tom Kellenberger wants to do for pharmacy what Expedia, Orbitz, and Travelocity have done for travel: Blow the market wide-open. In late May, the Wisconsin pharmacist flipped the switch on BidRx ( http://www.bidrx.com/), an on-line marketplace for prescription drugs, over-the-counter products, and pharmacy services.

"BidRx is a whole new way of doing business," Kellenberger said. "This is the ultimate in transparency for pharmacy transactions. Pharmacy benefit managers are no longer necessary."

Anyone with Internet access and a Web browser can use the system, Kellenberger said. The goal, he explained, is to give pharmacy consumers and prescribers more information and better prices while giving retail R.Ph.s access to more patients. The privately held company is funded by venture capital.

"Ten years ago, you couldn't have imagined Expedia," said Kenneth Bressers, owner of Omro Pharmacy, a Health Mart pharmacy in rural Omro, Wis., and an early pharmacy participant in BidRx. "Now Expedia is the first place I look when I travel. BidRx has brought me more than 100 potential new patients."

Prescribers and health plans can also use BidRx. If patient, prescriber, pharmacy, and payer use BidRx, the system automatically controls for formulary products and appropriate alternatives, covered services, patient cost, and pharmacy reimbursement, all at the point of prescribing. So there would be no more calls to sort out formulary issues, no more payment surprises for patients, no adjudication battles for third-party payers.

There is even a place in BidRx for drug manufacturers. The company charges for on-line advertising, marketing, and coupons. Electronic coupons let drugmakers court specific markets without changing their lowest price for Medicare and Medicaid calculations, Kellenberger said.

BidRx is not finding universal support. Immediate past president of the California Pharmacists Association George Pennebaker cautioned that the system must be embraced by patients, physicians, pharmacy retailers, and payers in order to thrive.

Bressers said he is using pricing to open the market and plans to add a menu of pharmacy services later, much as other on-line retailers have done. For now, cash patients without health coverage are the most obvious BidRx users, he said.

Patients covered by Medicare Part D are another market. As more Part D patients fall into the doughnut hole without coverage, price becomes key. "A lot of Part D patients are highly sensitive to competitive pricing because they know they're not going to get out of the doughnut hole this calendar year," Bressers said. "Independents can and do win when it comes to price." He said he is also seeing opportunities in OTCs and products not covered by health plans.

In a reverse of familiar buying patterns, Bressers is even seeing requests from Canadian consumers looking for better prices. "Every time you talk to a new patient, you open the door to new business."

Kellenberger is also working on third-party payers. He said BidRx has signed up "more than a thousand" employers for drug benefit programs that begin Jan. 1, 2007.

BidRx reduces the costs and administrative burdens associated with plans administered by third parties. Employers pay a flat fee that Kellenberger said is more affordable than a traditional PBM-based plan.