Specialty pharma tech platform Free Market Health raises $20M
Ryan Drant, founder and Managing Partner at Questa Capital, has joined the company’s board
Specialty drugs, which are used to treat chronic, serious, or life-threatening conditions, have special administration and handling requirements, and are often biotechnical in nature. All of this results in them being more expensive than more common drugs..
"The high cost of a specialty drug is generally reflective of the significant investment made into its research and development. While the introduction of biosimilars and generics should in theory lower costs for certain drugs, these gains have been offset by the launch of new specialty drugs and the broader use of current ones, as reported by Pharmaceutical Strategies Group," said Joe Cardosi, founder and CEO of Free Market Health, a specialty pharma tech platform, which raised a $20 million Series B round of funding on Thursday.
What Free Market Health does differently is that, instead of payers contracting with one or a small number of specialty pharmacies in a long-term contract with static contract prices, the company's platform enables a payer to leverage market competition at the referral or prescription level, allowing pharmacies to deliver a price in real time for the specialty drug referrals that best match their care and business models.
"Practically speaking, Free Market Heath offers a flexible platform that functions as a comprehensive operating system for payers to optimize their specialty drug management program. Payers use our platform in varying ways to address their specific challenges," Cardosi explained.
"Payers leverage the platform to connect their members to a broader network of high-quality specialty drug providers, executing clinical, quality, and cost savings strategies through our dynamic care stratification process, routing algorithms, and real-time competitive bidding."
Free Market Health works with multiple payer clients with membership throughout the US across both commercial and government funded lines of business, and is also contracted with 150 pharmacies of varying size, types, and care models. Currently, the platform currently manages more than 200,000 specialty drug claims annually, representing nearly a 400% increase year over year, through its partnerships with payers.
In terms of ROI, the company has seen payer client savings on average over $2,000 per specialty utilizer per year, representing greater than a 5% reduction in overall specialty drug spend.
For example, managed care organization Highmark Wholecare, which launched with Free Market Health in April 2021, has seen a 40% reduction in member abandonment of payer-authorized prescriptions, resulting in In addition, the relationship has generated an associated program savings of more than $2 per member per month.
The new funding round was led by Questa Capital, with participation from existing investors Alta Partners, Highmark Ventures, and 653 Investment Partners, bring its total funding to $35.5 million. The company plans to use new funds to build out its team.
In conjunction with the funding, it was also announced that Ryan Drant, founder and Managing Partner at Questa Capital, has joined the company’s Board of Directors.
"Ryan’s addition to the board is invaluable. He’s a sophisticated investor with deep experience in and passion for healthcare. We’re grateful to have his support and guidance as we navigate both the expected and unique challenges of growing a health tech company in an entrenched healthcare space like specialty pharmacy," said Cardosi.
The ultimate goal for Free Market Health is to become the foundational operating system for all payers to manage a high-quality, value-based specialty drug program, and more broadly, become the definitive orchestration layer in the specialty drug ecosystem.
"We look at client growth as opportunities to execute on our mission, which is never letting the process fail the patient. The specialty ecosystem is messy and every new client win is seen as net-new opportunity to execute on our mission. If we can do that, then we’ll consider it a success," Cardosi said.
"Payers are increasingly recognizing that the traditional approach to specialty drug management is not sustainable. With major regulatory and consumer pressure on drug pricing, forward-thinking payers are taking action. We’re looking for those innovative payers who want to make a change."
