There’s a way to buy prescription drugs for 50 percent off that’s perfectly legal, but requires so much red tape that few people know how to take advantage of it, or even know about it. Except for Wellpartner.

This company is a Portland, OR-based mail-order pharmacy that I learned about several weeks ago during a meeting with a couple of its investors, Joe Piper and Hans Lundin of Seattle-based Integra Ventures. I had never heard of the federal program known as 340B, in which clinics that care for poor people can buy top-selling medicines like Pfizer’s atorvastatin (Lipitor) at half of the average wholesale price that private insurers get charged. Wellpartner’s ability to help clinics get access to these cheap drugs was part of the reason it raised $16 million in August from Burrill & Co., Credit Suisse, Seattle-based Buerk Dale Victor, and Integra. I followed up with Wellpartner CEO Mike Wright and marketing head Robert Judge to learn more about how this works.

One of the key strategies at Wellpartner is to help clinics that serve the poor quit paying full price. With hardly any notice, it has become the nation’s leading provider of prescription medicines through the 340B program. This program started in the early 1990s, through an administrative rule passed by the Centers for Medicare and Medicaid Services, Judge says. It’s meant to provide a supply of meds to federally qualified health centers that now serve as a safety net for more than 17 million people in more than 6,000 facilities around the country. The problem is that many pharmacies that serve the clinics don’t participate in 340B, because red tape dictates that inventory and accounting of these supplies be kept completely separate, to prevent anybody with a solid income from pulling shenanigans to get their drugs for half-off, Wright says.

“Not everybody is scrupulous about these things,” Wright says.

Wellpartner has developed a way around this. Since 2005, it has managed the inventory for community pharmacies who want to place orders for qualified patients, and the pharmacy doesn’t have to keep its inventory separated, Wright says. What this means is that poor patients who need, say, an AIDS medicine like Gilead Sciences’ emtricitabine and tenofovir (Truvada) will have to make much lower co-payments on a cheaper drug, and therefore, they are more likely to follow doctors’ orders to take it consistently, Wright says.

“If you stop taking your meds, your next step can be the mortuary,” Wright says.

Oregon Health & Science University in Portland has a federally qualified health clinic that can buy these cheap drugs, and other clinics tend to be in highly urban or rural areas, or serve Indian tribes, Wright says. Wellpartner makes its money on the prescription orders through transaction fees, Judge says.

The pharmaceutical companies don’t exactly advertise this on TV or anywhere else I’ve seen. …Next Page »

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Wellpartner, a Portland, OR-based company that handles pharmacy services for health plans and Medicaid programs, said today it has raised $16.1 million in a fourth-round venture financing. Burrill & Co. led the investment, which included Credit Suisse, the manager of the Oregon Investment Fund, and previous backers, including Seattle-based Buerk Dale Victor and Integra Ventures, as reported in Private Equity Week. Caroline Kovac from Burrill & Co. will join the company’s board.

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It’s one of the paradoxes of modern medicine in the United States. At the doctor’s office and the drugstore, we say we want prescription drugs. In fact, we spend more than $200 billion on them every year. Between 1994 and 2005, a period in which the U.S. population increased by only 9 percent, the number of prescriptions patients had filled increased by a whopping 70 percent.

But when we get home, a strange intransigence sets in: large numbers of people never use the prescriptions they’ve been given, or don’t take them as directed. In a Harris Interactive poll last year, 35 percent of people said that fear of adverse reactions had kept them from taking prescriptions they’d already filled. The National Community of Pharmacists says that 24 percent of people fail to take the recommended dosage of their prescribed medicines, and that 29 percent stop taking them before they run out.

The healthcare industry’s term for this is “nonadherence,” and it’s a serious problem. The hit to the U.S. economy from health conditions that worsen when people don’t take their prescriptions correctly has been estimated at $200 billion to $300 billion a year.

Into this gap steps InnovationRx, a Newton, MA startup that thinks it can help improve medication adherence using electronic communications channels like e-mail, text messages, and live and automated phone calls. That idea, by itself, isn’t new; in fact, at least two other New England companies, Needham, MA-based Dovetail Health and New Haven, CT-based Intelecare, already offer similar outreach services. But InnovationRx isn’t just a reminder service. “What we are really setting out to do is identify the reasons for people not taking their medications”—and then craft a plan to convince them otherwise, company president Sean Teare told me last week.

“From a quick, 20-question online assessment we’re able to, first, determine who is likely to be nonadherent, and second, identify the reasons,” says Teare. “Is it cost? Fear of the side effects? Not understanding what the medication is supposed to do? Then we tailor an intervention based on that, and deliver it through the Web, or through a call center staffed by people trained in motivational interventions.”

Teare gave me the story behind InnovationRx in anticipation of the company’s official launch later this summer. As I noted in my roundup of Boston-area “Health 2.0″ companies yesterday, there’s likely to be a string of debuts this year by local startups that, like newcomer American Well, use Web technology either to reach patients or to process patient records, or both. I already knew, because I’d been told on embargo, that InnovationRx was one of them.

Teare, a former executive at TAP Pharmaceutical Products in Illinois, says the company devised its assessment system in collaboration with Nate Rickles, a professor in the School of Pharmacy at Northeastern University’s Bouvé College of Health Sciences. Rickle’s PhD research focused on depression, where nonadherence is a major …Next Page »

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