It started with a conviction familiar to many entrepreneurs: There has to be a better way.
For TJ Parker, that insight came when he was a teenager working in his parents' pharmacy in Concord, New Hampshire. Patients would show up with spreadsheets to sort through their various medications and the dates on which they could be refilled. To help customers remember when to take their pills, TJ would use a Sharpie to scribble on the orange bottles.
Of course, there was a better way, but it wasn't being used much in the U.S. In the Netherlands and in South Korea, medication is often dispensed in per-dose packets. So, if someone takes five medications, and two of them are twice-a-day and three are three-times-a-day, they'll get a tiny envelope with five pills marked for 8 a.m., another envelope with three pills marked for 2 p.m., and a third envelope with five pills marked for 8 p.m. Multiply by 30, and there are your monthly meds. Parker's dad had sold a version of this method to nursing homes and hospitals, but the regulatory and insurance landscape had dissuaded anyone from trying it with individuals in the U.S.
Parker looked at all sorts of ways to fix the problem while he was getting his pharmacy degree at the Massachusetts College of Pharmacy and Health Sciences. He spent a lot of time trying to design a widget or app that would reduce confusion for patients. But the problem he was trying to solve was more complex than that. "Most of the frustration for customers is intrinsically wrapped up in the pharmacy," Parker says. "If you look at someone who takes five, six, seven meds a month, a lot of the pain points you can only address if you are the pharmacy."
Which left Parker with one choice: To start an online pharmacy to deliver to patients their drugs in per-dose packets. The hurdles were not small: He'd need to get licensed in every state, and somehow account for the fact that most insurance companies won't pay for a new prescription until the old one is just a few days from running out. Overnight shipping is not cheap. The packets would need superior design. And he'd have to convince people to switch their medications to a pharmacy they'd never heard of. "We're not building a business for thousands of users. We're just not," says David Frankel, a managing partner with Founder Collective and an early investor in PillPack. "We're swinging for the fences."
All this, Parker knew, required money and mentors. He convinced Elliott Cohen, who'd formerly worked in venture capital, and whom Parker had met through MIT's Hacking Medicine competition, to be his co-founder, and his father, Leon, to become his director of pharmacy services. The idea for PillPack won MIT's Hacking Medicine competition in 2012. From there, Parker and Cohen enrolled in TechStars and won the trust of Colin Raney, then a managing director at design firm Ideo, who invited them to work out of the Ideo offices for four months to make sure their packaging and design was as user-friendly as it could be. (Raney is now PillPack's chief marketing officer.)
Now Parker has a full-blown company on his hands, with 200 employees and $63 million in venture backing. Parker won't reveal how many customers he has, but says PillPack has shipped more than five million packets, and that the company's employee base, revenue, and valuation all increased 10 times in 2015. Parker says future fundraising will help the company's visibility and show would-be customers that it really is as easy to use as it sounds.
PillPack is licensed in 49 states, and while plenty of companies will ship your medications to you, none coordinate refills and offer the easy-to-understand dosing information that PillPack does. To sign up for PillPack, individuals log on to the PillPack website and enter the names of all the medications they're taking and the pharmacy they're currently using, and Pillpack takes care of the rest.
PillPack originally charged a monthly fee for its service; now it's free, and customers generally pay only their usual co-pay. The monthly fee, says Parker, was based on two assumptions that didn't turn out to be true. First was that the number of medications taken by PillPack's average user--seven--was higher than they'd expected. That meant their margins would be better.
The second assumption was that customers who were taking the most medications--sometimes 10 or 15 a month--would be most willing to pay for PillPack, because the convenience would mean the most to them. In reality, those customers were relatively unwilling to pay. Their bills for prescriptions were already so high that they just couldn't add any other charges. Now, says Parker, PillPack makes money on every customer.
Parker still plans to raise more money. A few brick-and-mortar storefronts might persuade skeptics, and there's the ongoing challenge of raising awareness and convincing people that PillPack really is an easier way to get prescriptions. "People always say in health care that something is going to be better and it ends up being so complicated and sometimes worse," says Parker. "This really is better."