Capital Rx
This episode of the Astonishing Healthcare podcast features the CEOs of Prime Therapeutics, Mostafa Kamal, and Capital Rx, AJ Loiacono. They join Michael Passanante, SVP of Marketing & Communications at Capital Rx, to share the story behind the strategic alliance between the organizations and their vision to reimagine pharmacy and provide better care to patients across the country leveraging next-generation technology: JUDI®.
Mostafa and AJ emphasize the importance of platform modernization in pharmacy and healthcare more broadly and explain what led up to Prime chosing Capital Rx for an alliance and investment: complementary capabilities, alignment of core values, and, of course, JUDI, Capital Rx's enterprise health platform. Listen below, and don't forget to subscribe on Apple, Spotify, or YouTube Music!
Transcript
Lightly edited for clarity.
[00:27] Michael Passanante: Hi, this is Mike Passanante, SVP of Marketing & Communications at Capital Rx. Welcome to the Astonishing Healthcare podcast. I am joined today by Mostafa Kamal, CEO of Prime Therapeutics, and AJ Loiacono, CEO of Capital Rx, to talk about some very prominent healthcare news that we're happy to announce about our strategic alliance together. So, gentlemen, welcome to the show.
Mostafa Kamal: Thank you very much. Good to be with you, Mike.
[00:50] Michael Passanante: Okay, so let's go back to the beginning. Where did the conversation start for the two of you? I mean, what did this look like at the very beginning of this relationship?
Mostafa Kamal: Well, you know, I've known AJ for quite some time, and I've always admired AJ's entrepreneurial spirit, his work, and his curiosity about how to do things better. And I recall a conversation with AJ years ago when he was contemplating the idea of Capital Rx. And it was a good idea then, it's an even better idea now. And so that, interestingly, was an initial discussion. But, you know, as I joined Prime in December of 2022 by way of acquisition; I was the CEO of Magellan Rx for eight years. And when we put the two organizations together, we really created a new enterprise when Prime and Magellan came together. And the goal is to reimagine pharmacy. And our purpose is to provide the care that we would want for our loved ones.
And so in order to do that, you have to focus on experiences, you have to focus on outcomes. And oftentimes in our industry, if you think about the aging infrastructure, and particularly in pharmacy, oftentimes that infrastructure gets in the way of accomplishing those things. So, we knew that platform modernization was going to be an important priority for us.
And when we stacked the options, everything that's available externally, internal build, it was a no brainer that the right partner for us was Capital Rx. When you think about the capabilities, the alignment around vision and mission and key principles, it also helps that there's a level of trust in our relationship as well. So that's how it started and how we got here, from my viewpoint.
AJ Loiacono: Yeah. I mean, it's always nice when you know someone, and you enter into any long-term partnership. And I often say healthcare is a very small community that has a very large audience of users. So, it was very helpful that I knew Mostafa as well as his colleagues, and there was a comfort level there that we had worked together in partnerships before coming together with the Judy licensing arrangement. And so, for us, it was a very easy decision back to this concept of having alignment and working with someone that you trust, and you share a vision with.
[03:04] Michael Passanante: Excellent. And so, we got up to this point where you've known each other, you've had these conversations. What really made each of you say, yes, this is the right time for this strategic alliance to happen?
Mostafa Kamal: You know, from our standpoint, there's the need and the desire to move forward, to move our industry forward, and then there's the technical components of putting the right kind of deal together. And so, I talked about the importance of having the right platform to enable our vision and to accelerate the transformation that our industry so desperately needs. And then when it came down to finding the right partner now, we sat down and initially talked about the capabilities of JUDI.
And when we think about how JUDI was built to integrate all the workflows of PBM in an efficient way, with a team that's been dedicated to this mission for more than half a decade now, it shows. When you look at the platform, and when you examine it and the team's willingness to answer all our questions and pressure tests, and do all the things that big companies need to do in order to feel comfortable with technology, then it comes down to alignment on principles and values. Are we aligned in terms of what we're trying to deliver to the marketplace? Are we aligned in terms of how we want to take care of clients and patients, and are we aligned in terms of how we treat people? Which is incredibly important.
What do you do when you have a disagreement? What do you do? How do you handle that? And throughout the entire process of putting this deal together, AJ and I spend hours and hours on the phone. Just first principles, “Hey, we know we want to get to the finish line on this. Let's just attack any challenges and issues in a thoughtful and collaborative way.” And that spoke volumes. And so, it gave us a lot of comfort in moving forward with this partnership.
AJ Loiacono: Yeah, I mean, I remember one of our first meetings together. We must have spent 3-4 hours just talking about the industry. Where is the industry heading? What's important to create better care, better patient engagement? It's great when you have someone who shares a similar vision. It's very, very important at the start. And I of think this was one of the things that helped both organizations work so well together. So, we couldn't be happier about the partnership.
[05:13] Michael Passanante: And this is not an ordinary partnership because both organizations have skin in the game. There's ownership stake, there's exclusivity. Talk to us a little bit about that. Do you want to start out, Mostafa?
Mostafa Kamal: Yeah, I think, you know, as I talked about the core values and principles and the alignment, it's important that a deal structure reflects those things.
For Prime, it's really important that we have skin in the game, that we've got the right level of focus on owning our destiny and making sure that we've got the right partner. And so we wanted to demonstrate our commitment to this partnership.
So, we made an investment in Capital Rx. We've taken a minority ownership position, and we've got this software as a service license agreement that enables us to bring JUDI exclusively into the Prime ecosystem and leverage it as our enterprise health platform going forward, which will enable us to unlock a lot of opportunity.
And when I think about the relatively distinctive competencies of the organization, it's astonishing to me. You know, it's unusual when you have an opportunity to collaborate with an organization that's almost entirely complementary. When I think about Prime's size and scale, depth of its payer relationships, clinical capabilities, and the way that we focus on caring for patients, and you combine that with Capital Rx’s expertise in software development, depth of understanding, workflows and processes, you put those things together and it's an unbeatable collaboration case.
AJ Loiacono: Yeah, I couldn't agree more. When I think about the partnership and you have this opportunity to demonstrate the scale and capabilities of JUDI, it's an extraordinary opportunity. One of the things that we focused on throughout this entire partnership and the discussions was an eye to the future, as well as the enhancements you're going to make with the current workflow models. And I think there's almost an unfair advantage, I want to say, by deploying this technology with Prime's scale, that will really shine in the industry.
Mostafa Kamal: Yeah.
[07:20] Michael Passanante: And something that's top of mind for people right now is security. We've all seen news of the cybersecurity incidents occurring throughout healthcare. AJ, tell us why that's important. And then I want to hear from you, Mostafa, why is that so important to the underlying structure of this deal and how we move healthcare forward from here?
AJ Loiacono: Well, security is extraordinarily important for any enterprise or organization, in particular, healthcare. At the core of Capital Rx is security. It's top of mind and everything from our architecture to our discipline.
So, it's seen in things like we are SOC 2 Type 2 certified. We're URAC certified, we're HIPAA compliant. We're HITRUST certified this quarter. In addition, we're working towards FiSMa certification by the end of the year. At the heart of all of our disciplines is NIST 853 (National Institute of Standards and Technology). I think we're on Rev5 at this point. The original framework was released in 2014. I think by 2016, it really became the industry standard for cybersecurity. And for us, it's embracing these principles in everything we do, from our architecture, from our compliance to our workflow management. And this was very important. The other thing that we like to always focus on is we do use AWS and make extensive use of Lambda. And for us, this gives us, yes, the scaling capabilities that you want at the most efficient price point.
But in addition, it's the security. And the example I always like to give is, if you think about it, an organization like Netflix, they have the size and the scale to build out their own infrastructure, clearly. But they chose to use AWS, not just because it uses the scale but -- think about it -- there's only been one known disclosure of any type of malware on AWS. And that's an extraordinary accomplishment when you think about the size and the scale of that organization. In addition, multiple members of the intelligence community for the US government operate on AWS.
Again, I think security has become an arms race on some level. And to be frank, I think there's only one or two organizations that truly can compete at this level to provide the security you need for, you know, a massive organization such as Prime.
Mostafa Kamal: Yeah, and, you know, it's funny. People say that PBM has a lot of acronyms. I mean, the stuff that AJ just rattled off, it seems like every month, every quarter, there's a new standard and you've got to keep up. I agree with AJ's perspective. It is an arms race out there. And, you know, medical health information is incredibly valuable on the dark web, you know. And so, when you think about the arms race between the good guys and the bad guys, it's so essential that we protect the health information of our patients as if it were our own family members. And I think that becomes very expensive, very challenging, and a full-time job when you're doing it on legacy systems, on prem infrastructure. And the added benefit to the security posture with JUDI is, I think we leapfrog. A lot of the standards that AJ mentioned come to us as part of the platform.
[10:41] Michael Passanante: And that's certainly one of the many benefits of operating with the type of security that we do. What other benefits do you see coming to your members as a result of this partnership?
Mostafa Kamal: Well, I think that there are a few things. I view there's benefit to our employees. As you think about a call center agent or a prior authorization of pharmacy tech, or a pharmacist who's working a prior authorization, A lot of times you've, you have to go to three, and four, and five different screens and documents to be able to answer a simple question. And that's just a function of the fact that these systems were created a long time ago and they were created separately, and they didn't contemplate integrating these workflows. Formularies were developed, and then specialty pharmacy was developed.
And so when you take a step back and you think about a single platform that's web based, where you're not logging into a green screen and you've got things you can click on and buttons and whatnot, that could answer the questions that you have, that a patient has while they're on the phone with you. That improves not only the member experience, but it improves the employee experience. And I think that allows our people to operate at the top of their license. I think that's an important benefit that I see internally for Prime and for our members.
Importantly, as we think about transforming this business, we need to deploy innovative products and solutions much more rapidly. And we can't have six, seven, eight months to implement and test something. We want to be able to deploy solutions more quickly. Judy enables us to do that, gives us the opportunity to do that at scale across our client base. And then the third bucket, I'd say, is when you think about the complexity of the regulatory environment at the state level, different state regs, and you've got to comply with all these things, being able to do that in a scalable way across the book of business clearly saves a lot of money and administrative costs, which will help us continue to be and become even more competitive in the marketplace to retain and win business.
That just scratches the surface, Michael.
[12:41] Michael Passanante: Yeah. How would you answer that? Aj?
AJ Loiacono: Well, I mean, I think one of the guiding principles always for us when we're developing features or functionality is do more with less. And, you know, it's not so much that you want to be focused on velocity and the count of transactions. You want to be focused high quality interactions with the people and the events that need the time.
So, if you think about it, back to something like prior authorization, if you could focus on the one or two that might require more high touch or better intervention, or the ability to work with the patient as well as the prescriber -- that's a very valuable moment. Versus the other 500 that might be moving through the queue where you can obviously layer in more efficiency and to make a better work experience, not just for the service member that is taking care of those events, but when you do need to apply high touch, I think that is absolutely critical in any workflow. I don't care if it comes down to reimbursing a pharmacy or working with a plan sponsor or their members. I think the time that you want to spend that is high quality is critical to creating a better service level and a better service experience.
[13:56] Michael Passanante: Yep, absolutely. AJ, I spend time here in the office with you and I know you talk to a lot of people. I'm curious what the market is saying to you since this deal has occurred.
AJ Loiacono: Well, I think we have created lots of believers overnight where it's hard when you get into what I call the geeky space of unit economics and cost of computer, cost of administration. And I feel like our industry is already so complex, with its share of acronyms, or its workflow and administrative complexities. But what I try and have people understand is, very simply, any service you're providing has a cost. There's a gross and a net to any service. And if you can pull down administrative costs and create a better work experience, you're going to have an unfair advantage in market.
And we had seen this in our own book of business. One of the things that we're thrilled about with the collaboration and partnership with Prime is to take this on a scale we never dreamed possible. If you talk about the definition of success seven years ago, when we were working on our first days at Capital Rx, you say, “Hey, it would be great one day if we could possibly interact with patients, a million of them, 2 million or 3 million.” And now you start thinking about tens of millions of people that can benefit from this technology and service.
So again, this was something that is special for myself, and I think the industry is coming around where they're like, wait a second, there might be something here. And it's nice to be able to demonstrate that proof point.
[15:42] Michael Passanante: What have you been hearing, Mostafa?
Mostafa Kamal: Well, you know, I think that, in addition to what AJ said, I do think that, you know, the team here at Capital Rx and the developers have worked on JUDI, have poured their heart and soul into this application in ways that it's really an enterprise platform that deserves to be deployed at this scale. And it's, I'm sure, rewarding for AJ and the team to have the opportunity to do that, but they earned it.
You know, we put the system through very rigorous testing. We have a lot of experts who've done system migrations in our team. And, you know, to a person, everybody's been impressed by what we've seen here.
And externally, one of industry participants, in their reaction, I thought this was a good way to characterize it. They said, oh, wow, this is like leapfrogging from dial up to high-speed Internet in one move. And I think that that sentiment is accurate from my perspective. And I think people haven't even had the opportunity to experience what it'll really unlock for the future. So, there's a lot of enthusiasm, and I think this will just create more momentum and comfort for others to move towards modern application.
[16:51] Michael Passanante: Excellent. Well, we're off to a quick start in this partnership. I don't want to get ahead of ourselves, but what can we expect next? What's the future hold?
Mostafa Kamal: Well, I'd say, from our perspective, we want to make sure that we deploy the software, the platform, across our book of business, and that means a thoughtful migration of our book of business. That's critical. I don't want to look past that. I know the teams are working hard and doing that successfully will earn us the right to do some really creative and innovative things going forward.
But I can't help but think 3 to 5 years in the future. I envision a world where the distance between the pharmacy benefit and the medical benefit is completely closed or collapsed so that you can think of a patient holistically, manage a patient's experience and total outcomes holistically, working with health plans to drive efficiency across the spectrum of pharmacy and medical. And I think that an enterprise health platform like JUDI enables that kind of conversation. And again, we've got to put the winds on the board with migration. But I think the sky's the limit going forward.
AJ Loiacono: Yeah. Clearly, our focus is successful implementation with our partners and to make sure that this is a wonderful case study for everyone. But as you look 3, 4, 5 years down the road, there's so much efficiency you can continue to lock across the healthcare ecosystem. And we're excited about that opportunity, working with Prime.
Michael Passanante: Well, the sky is the limit, and I'm happy to be a part of this journey with both of you. AJ and Mostafa, thanks for joining us on the show today.
Mostafa Kamal: Thank you, Michael.
AJ Loiacono: Thanks, Mike.
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