Capital RX reaches $ 3.5 billion in revenues with drug intermediaries under fire

• The STARTUP for the management of transparent pharmacy services Capital RX reached $ 3.5 billion in revenues last year.
• The startup increases while the congress seeks to slow down the giants of the PBM which benefit from high medication costs.
• Capital RX, supported by VC companies like General Catalyst, does not earn money from drugs.

The Pharmacy RX Pharmacy Advantages Startup generated $ 3.5 billion in revenues last year while Congress sought to reign in inherited intermediaries who have long benefited from high medication costs.

Pharmacy, or PBM services, negotiate the prices of medicines between drug manufacturers, insurance companies and pharmacies. These companies are faced with growing criticisms to mark the prices of medicines for their own benefit, in particular in Congress, where legislators in 2024 have sought to pass reforms that would further force transparency in PBM business practices.

Today, the three largest PBMs – CVS Health’s Caremark, Optumrx from United Healthcare and the expresses of Cigna – largely earn money by reducing the discounts they negotiate between drug manufacturers and insurers. PBMs are encouraged to maintain high medication expenses because higher medication costs generally mean higher discounts and, therefore, greater benefits.

Capital RX, a health care startup supported by VC companies like General Catalyst and Capital Transformation, adopts a different approach.

The startup is charged as a transparent PBM which does not benefit from higher medication expenses. Instead, he returns to the basics of the PBM industry, invoicing health insurers and employers of flat administrative costs to manage their prescription medication plans.

With PBM players inherited under fire, capital RX affairs are increasing. The startup brought in $ 3.5 billion in revenues last year in its business sectors, and CEO AJ Loiacono told Business Insider exclusively that it projects $ 4.8 billion in revenues in 2025.

Despite its outbreak of income, Capital RX is not yet profitable, which Loiacono has attributed to the heavy investment of the startup in its technological development. He said the startup is on the right track to be profitable by the end of 2025.

A large part of the capital RX success is based on its ability to steal customers from the three major PBMs – the startup said it has signed 80 new customers last year. He competes with startups like Rightway, supported by VC companies, notably Khosla Ventures and Tiger Global, as well as more traditional small PBMs like Navitus Health Solutions, co -owner by Costco and the health system of the Midwest SSM Health.

Capital RX has raised $ 355 million since its foundation in 2017, including $ 115 million in series financing last year, which estimated Capital RX at $ 1.26 billion. The startup refused to share its current valuation.

Since Capital RX does not take a reduction in discounts on drugs, however, its transparent PBM activity operates at a lower margin than that of inherited PBM. This is where the second half of his activities comes into play.

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About 40% of capital RX revenues come from the pharmacy administration of benefits, which involves managing tasks for health plans such as processing of prescription complaints and patients to access their drugs. The startup has built a technological platform called Judi to centralize these tasks, and Loiacono said that it saw the adoption of technology even faster than PBM RX PBM activities.

The startup also launches functionalities for processing medical complaints on its platform. As a rule, health plans must deal with pharmacy and medical complaints separately. Capital RX said it was planning to extend the platform more to include vision and dental benefits.

“It costs us about 70% less to administer a plan or patient than our competitors because of our Judi platform,” said Loiacono. The startup has authorized its technology to a variety of health systems and health plans, including Memorial Hermann in Texas and 23 Bluecross Blueshield plans.

In the United States, medication costs have continued to increase while pharmaceutical companies are developing new specialized drugs. According to IQVIA, almost half a bill of dollars in pharmacy medicines are expected in 2025.

The Congress seemed ready to adopt measures to curb PBMs as part of a federal financing bill in December, but these efforts were excluded from the final version of the bill at the last minute.

While Loiacono said that it was difficult to predict the reforms of the pricing of drugs that the Trump administration could continue this year, if necessary, he said that he expected the Congress to return the legislation left on the table in December.

“Whoever requests the elimination of complexity, opacity and the ability to take advantage of the ignorance of a patient around the price of the drug – they are all indicators beneficial of where we could go”, he said.