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Scouting Report-Sempre Health: Incentivizing Prescription Adherence with Dynamic Pricing

The Driver:

On June 15th, San Francisco based startup Sempre Health announced that it had raised $15M in a Series B round led by Blue Venture Fund with UPMC Enterprises, Rethink Impact, and LifeForce Capital and Industry Ventures joining the round. Founded in 2015, the company offers behavioral-based discounts on drug copays. The company currently offers discounts on drugs for diabetes, cardiovascular and respiratory conditions. The company plans for use the proceeds to attempt to enroll more patients in the service and expand the number of drugs offered for coverage under their plans.

The Takeaways:

  • Medication non-adherence costs between $100M-$300B per year, and causes approximately 10% of hospitalizations, often driven by cost of the prescriptions.

  • Sempre claims that its behavioral economics based approach can increase adherence by 15% on average while achieving a Net Promoter Score (NPS) of 92 from its members.

  • The company states that they have had more than 125,000 patients managing chronic conditions on their platform and have one healthcare partner that implemented its program in January 2020 and is “on track to eclipse $1 million in savings for members in just seven months.”

  • While a 2012 study noted “evidence is limited on whether [interventions to improve adherence] are broadly applicable or drive long-term outcomes, Sempre’s approach which incorporates both behavioral economics and dynamic pricing may hold promise.

The Story:

Sempre was founded by Anurati Mathur, who has a B.S. in microbiology and business for U.C. Berkeley and who has been involved in healthcare and healthcare startups including Propeller Health, Practice Fusion and DaVita Healthcare Partners. Mathur became frustrated when she went to pick up some prescription eye drops for an allergy, and left without the prescription when she found out it would cost $150. Realizing that patients like her often don’t pickup or take their medications due to cost led her to found the company. Under the program the company sends out text based reminders with information about discounts and how they might change depending upon when the prescription is picked up. According to Mathur the discounts help incentivize adherence. However, only patients who routinely pick up their medications are eligible for the discounts. The program is driven by a two-sided marketplace, whereby Sempre solicits drug companies to participate by adding their drugs and setting a budget on the Sempre platform, while it simultaneously works with its health plan customers to determine which of the plan’s customers it will invite to participate in the service. Sempre stated that they have had more than 125,000 patients managing chronic conditions since April 2019 and expects to surpass 250,000 on its platform by the end of 2020. In addition the company claims to have one healthcare partner that implemented its program in January 2020 and is “on track to eclipse $1 million in savings for members in just seven months.”

The Differentiator(s):

According to the New England Journal of Medicine 20-30% of prescriptions are never even filled and costs the U.S. Healthcare system anywhere between $100-$300B per year. Sempre uses incentives based on behavioral economics and dynamic pricing to drive higher engagement and better adherence and medication compliance. Compared to traditional copay programs Sempre’s program is targeted at high cost and chronic conditions and allows players to target the customers who will receive the discounts. In addition, by using dynamic pricing and text-based reminders Sempre works with patients to get them to refill and pick up prescriptions early in the process at lower cost creating a self reinforcing pattern where they control the size of their discounts as a direct result of their behavior. In addition, by using budgets from the pharmaceutical companies to fund discounts in copayments from insurers to consumers Sempre is connecting all the players in the ecosystem, something typically not found in healthcare.

The Big Picture:

As noted, prescription adherence and compliance is a major problem in the U.S. healthcare system, often driven by the cost of medication and copays. Sempre is simply applying the principles of behavioral economics used in other industries such as the airlines or automobile insurance (ex: good driver discounts) to influence behavior. Too often in healthcare, patient/consumer behavior cannot influence cost, leaving all patients at the mercy of arbitrary pricing mechanisms, disconnected from market economics. While Sempre’s programs are currently only being used for high-cost and chronic conditions there is the potential to adapt these mechanisms to any illness where improved compliance is an easy and cost-effective way to improve outcomes and quality. However, given that the program is currently directed to those who are already diligent about filling their prescriptions, it will be important to review how compliance and adherence are affected for those who are less diligent about filling prescriptions, a greater source of poor care and outcomes. Assuming behavioral economics proves as successful in healthcare as it has in other disciplines, this model could easily be applied not just to prescriptions but to other problem areas in healthcare where compliance and adherence are an issue, like routine diagnostic testing and even post-procedure follow-up appointments. While other factors influencing behavior might need to be factored into these types of programs, such as patients' access to transportation, this would likely be easy enough to design in (please note: these are hypothetical musings, and not product suggestions from Sempre Health). Programs such as these which inject an element of transparency and patient control into pricing and move healthcare towards a more market and consumer driven model are sorely needed as we move into a more value-driven, consumer centric model.


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