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New PBM Launches to Bring a New Model to Pharmacy Benefits

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LucyRx has $500 million in equity it will use for acquisitions and to build technology and infrastructure. It aims to be a national, full-service alternative to the big three PBMs.

David Blair

David Blair

PBM veteran David Blair is on a mission to make prescription drug management more accessible and understandable for both health plans and consumers. He believes he and his two co-founders — Martin Payne and Josh Lynn — can provide an alternative to the larger PBMs that has the same national scale but provides transparency about the process and costs of managing prescription drugs.

“There isn’t an alternative to the big three PBMs, which, because of vertical integration, are managing the same drugs their selling,” he said in an interview with Formulary Watch. “The middle market PBMs don’t have the scale or capabilities to adequately service the health plan space. The health plan space is stuck with the big three because they can’t get the pricing they need from other organizations.”

Enter LucyRx, a new PBM that Blair said eventually will be able to compete with the larger PBMs — Express Scripts, OptumRx and CVS Caremark — in terms of pricing. The new company also plans to develop advanced technology to better manage drug benefits and comply with state and federal regulations

The name derives from the Latin for “light,” which Blair said focuses on the company’s mission to shed light on the process of pharmacy benefits. “We want to provide the transparency that health plan clients are demanding, that state legislation is requiring and that new federal legislation is expected to require,” he said.

That transparency would involve full disclosure on how pharmacy benefits are managed, what the underlying economics for the drug benefit are; what the lowest-cost drugs are; what the best outcomes are; and what the PBM receives in rebates and the fees they charge.

“We want to provide an open and auditable process for plans, showing them our costs so everyone can spend their time managing the underlying drivers of pharmacy costs,” he said.

Blair said LucyRx will be flexible and work with health plan clients to meet their needs, whether that means using a fixed-price administration fee or pass-through pricing and rebates. The company’s overall approach, Blair said, is find the best health outcome for the lowest net cost.

Blair believes that he and co-founders are well-positioned to bring together an experienced team. Blair co-founded and served as executive chairman for Gateway Health Partners, a pharmacy cost containment and formulary management company. Earlier in his career, he was CEO of Catalyst Health Solutions, a PBM that is now part of United Healthcare. Payne also served as an executive at Catalyst and partner to Gateway Health. Motola previously served as an investment professional at a private equity fund focused on healthcare and technology.

Although LucyRx is not yet operational, the company has $500 million in equity for strategic acquisitions over the next several years. LucyRx is looking to acquire midsize PBMs with earnings up to $50 million. Blair expects the first acquisition to be announced sometime this year. The plan is to eventually be licensed and provide services in all 50 states.

“We’re looking to acquire pharmacy benefit managers that have talent and newer technology solutions. We’re taking a highly targeted approach to those acquisitions,” he said.

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