Issue 3, 2018. June-July


INNOVATORS AND DISRUPTORS: IDEAS TO BRING CHANGE is starting a new column on the entrepreneurs pushing Georgia's development forward. For our second interview, we spoke with Giorgi Bezhitashvili and his start-up partner Josuah Rechtsteiner about their app to cut medical bills, which they plan to launch in the U.S. market.

Sally White

A small Tbilisi-based team of IT and start-up specialists is nothing if not ambitious. What began as their project to cut medical prescription costs for Georgians is now targeting the $500-billion U.S. pharmacy market. Almost up-and-running with it, they are collecting seed money to complete an app, widen their U.S. business-to-business (B2B) client base and sign up more partners.

As founders Giorgi Bezhitashvili and his start-up partner Josuah Rechtsteiner explain, their international research for electronic prescription and distribution business models for pharmaceutical products drew them inevitably to the vast U.S. market. In most countries, medicines cannot be retailed alongside other e-commerce traded products because medicines are controlled by extensive government regulations. In the U.S., dedicated online prescription fulfillment is a well-established and accepted business in its own right, with a number of companies claiming to deliver the cheapest possible drugs.

Yet, after just a few months of delving into the U.S. business models, Bezhitashvili and Rechtsteiner found them full of flaws. Not only could they see only too clearly what in other countries would be conflicts of interest and third-party influences, with multiple cases of cross-ownerships, but customer complaint levels are rising. Industry players and professionals with whom they were meeting also expressed a clear level of discontent.

The Georgians found themselves thinking that by working with disaffected professionals within the U.S. distribution chains they could offer a better and competing service. The great advantage of the internet is that the fact that they are Tbilisi-based is not an obstacle. It is enough that their industry and medical partners, advisers and mentors are well-entrenched, connected and respected locally in the U.S.

"The solution is to restore competition and market forces by creating an efficient platform within which manufacturers, pharmacies and patients can act freely without the pricing interference of third-parties and other conflicts of interest that have degraded U.S. healthcare," says Bezhitashvili.

What they have designed is an app that allows patients to "select drug, price and pharmacy just seconds after the doctor has submitted the e-prescription," adds Rechtsteiner. "Instead of sending the electronic prescription to a normal pharmacy, doctors are able to send prescriptions to our app over existing prescription networks."

"With our app installed on the patient's smartphone, the patient is immediately notified at which prices the medication is available at and which allowed substitutes are available," he added.

The app, says Bezhitashvili, also informs the patients of any industry deals or government help offered on products. Then the patient makes a choice on the drug and price and the prescription is forwarded to the chosen pharmacy.

Their partnerships with established pharmacists mean they can offer online consultation, giving the ability to understand how to choose the right drug at the right price before buying. The app includes drug information and reviews, too, so that the patient can be fully briefed on the options.

The U.S. business is called My Drug App. The service is designed to be free for patients, the revenue coming from multiple B2B sources. These include client sourcing fees, ad sales to pharmaceutical companies and healthcare providers, provisions for cross-selling complementary services, monetization of analytical insights from currently uncaptured point-of-sale data, plus revenue from various features of the U.S. medical system.

In addition, changes in the U.S. pharmaceutical industry could open up huge opportunities. At the moment, patients may not know the names of generic medications because their manufacturers do not advertise them. Yet even now, more and more patients are switching to these cheaper versions. Patients are very much more likely to pay and take-up generic, as opposed to branded medicines. In 2016, 3.9 billion prescriptions were dispensed, according to the U.S. Association for Accessible Medicines.

More income from generic medicine sales is forecast. The pace of change is expected to speed up as U.S. President Donald Trump's new appointee running the Food and Drug Administration, Scott Gottlieb, strives to move the needle on America's "sky-high drug bills." He is making a concentrated push toward expanding generic drug competition.

The Georgian team has pitched My Drug App to meet this. It "allows generic manufacturers to launch ad and rebate campaigns with very high precision and optimal efficiency," says Bezhitashvili. The data captured by My Drug App also provides manufacturers with information on customer decision-making at the point of sale, and this is going down "very well" with prospective customers.

Currently, the team expects to very quickly reach the stage of processing around 100,000 prescriptions a month, helped by their strong local connections.

Not bad for a small Tbilisi start-up! The team members already have several IT start-ups under their belts, and a next step is a similar drug distribution app for Georgia - Health Hub.