The promise of breakthrough prescribed drugs has created an surprising disaster in employer advantages. As GLP-1 drugs show exceptional efficacy for weight administration and power illness prevention, their prices have change into untenable for many companies. The numbers inform the story: U.S. prescription drug spending hit $805.9B in 2024, climbing 10.2% year-over-year, whereas two-thirds of employers have dropped GLP-1 protection solely slightly than face projected healthcare value will increase of 10% in 2026. Andel is constructing a membership platform that sidesteps the normal pharmacy profit supervisor infrastructure, aggregating worker demand throughout a number of employers to barter immediately with producers. The cooperative mannequin permits employers to contribute subsidies at no matter stage matches their price range whereas members pay a small month-to-month charge for entry, making a profit construction that doesn’t require employers to soak up the complete value of protection.
AlleyWatch sat down with Andel CEO and Cofounder Jay Bregman to be taught extra in regards to the enterprise, the longer term plans, current fudning spherical, and far, a lot, extra…
Who had been your buyers and the way a lot did you increase?
Andel’s buyers embody Lightbank, Seedcamp, Bertelsmann Healthcare Investments, Houghton Road Ventures, and Springboard Well being Angels, backing a seed spherical of $4.5M.
Inform us in regards to the services or products that Andel affords.
Andel is a revolution in drug affordability — a cooperative worker platform that unlocks entry to GLP-1s and different brand-name drugs. Workers want these drugs, however employers can’t afford to cowl them.
We remedy this downside by leveraging the mixed shopping for energy of our members to go immediately to producers for higher costs and a assured provide. Then, employers add a subsidy of their selecting to additional scale back prices to members.
What impressed the beginning of Andel?
My household comes from drugs and I had all the time wished to construct a healthcare startup. As my fourth enterprise, I felt I may take an enormous swing and remedy an important downside in American healthcare: model title prescription pricing and distribution.
I noticed the facility of GLP-1s and different next-generation brand-name medication and I puzzled why it was so troublesome for folks to entry them. It appeared like having access to generic older medication was straightforward however actually life-changing medicines had been out of attain. It felt like a ‘miracle drug paradox’ the place pharma was inventing actually wonderful therapies however the higher they had been and extra folks that would profit the less and fewer folks had been really getting them. It felt just like the market was crying out for a brand new mannequin.
Ritu (cofounder) and I’ve the experience wanted to resolve this downside. I’ve raised greater than $250 million and efficiently exited three firms, together with the ridesharing community Hailo, which went on to change into Lyft Europe, and Thimble, which was later acquired by Arch Insurance coverage.
Ritu is a former senior government at CVS Caremark and a licensed pharmacist with over 20 years main the business’s largest profit consulting corporations at Segal and Pharmaceutical Methods Group.
How is Andel completely different?
Andel’s platform combines producer’s reductions with employer subsidies to cut back prices for members. We ship the capabilities of a licensed pharmacy via a user-friendly digital platform that provides an unbelievable member expertise.
Finally, our purpose is to change into what I wish to name the Spotify of the drug business: a central platform that facilitates the sale of products even when it’s not making them itself.
Employers pay nothing for this system, not like different options, and since we generate income via a small month-to-month charge charged to workers, our incentives are aligned with employers and workers to cut back drug prices and develop our membership as broadly as potential.
What market does Andel goal and the way large is it?
US prescription drug expenditures rose to $805.9B in 2024, a rise of 10.2% over the earlier 12 months. Globally it’s within the trillions of {dollars}.
Andel targets any plan sponsors who both have already dropped GLP-1 protection for weight reduction or are contemplating it. This might embody employers of all sizes, unions, coalitions, and even well being plans. Andel will even carry different medicines past GLP-1s which aren’t extensively coated by insurance coverage.
Though Andel is presently centered on the US market, we imagine the dynamic of excessive drug prices (particularly pushed by MFN insurance policies) will permit us to develop elsewhere in North America, Europe, and past.
What’s your enterprise mannequin?
We’re B2B2C, not direct-to-consumer. We don’t cost employers a charge and their subsidies are handed solely via to cut back the drug prices of their workers at level of sale. Workers are charged a small month-to-month charge to entry the community and their employer subsidies.
How are you making ready for a possible financial slowdown?
We’re hiring a gross sales crew. As a result of throughout financial downturns, the very first thing firms do is overview their advantages, and the primary profit more likely to be reduce is GLP-1 protection and their pharmacy profit. That may imply they are going to be on the lookout for alternate options that permit them to offer GLP-1 advantages in a more cost effective manner.
For drug producers, a downturn means they are going to be on the lookout for methods to develop their payer channels, and Andel is an ideal solution to tackle protection gaps and improve gross sales.
What was the funding course of like?
Ferocious. GLP-1 / model title entry and affordability is an important subject going through humanity. Andel is a chance to assist construct an enormous enterprise whereas additionally fixing an important societal downside, and that mixture solely comes alongside so very hardly ever.
What are the most important challenges that you just confronted whereas elevating capital?
The drug pricing market may be very advanced and obscure. Even some very sensible folks suppose that the answer is for producers to easily scale back costs throughout the board, however that fails to acknowledge a key tenant of insurance coverage – when you’ve got a product that applies to virtually everybody in your inhabitants, costs must be 90% beneath present ranges to make that viable, and that would depart pharma firms no incentive to create the following life-changing drugs.
What elements about your enterprise led your buyers to put in writing the test?
A few of them knew me effectively and that I may execute. Others noticed the progress we had made funding it ourselves and had been satisfied we may make it occur. Past that, the market was working in our favor, the relentless concentrate on decrease costs, innovation, and extra direct options had been super-helpful.
A few of them knew me effectively and that I may execute. Others noticed the progress we had made funding it ourselves and had been satisfied we may make it occur. Past that, the market was working in our favor, the relentless concentrate on decrease costs, innovation, and extra direct options had been super-helpful.
What are the milestones you propose to realize within the subsequent six months?
Over the following six months, we’re centered on making ready for our nationwide launch in early 2026: rising our employer community, deepening relationships with plan sponsors and pharmaceutical producers, and making certain an ideal expertise for the primary members who be part of Andel.
What recommendation are you able to supply firms in New York that wouldn’t have a contemporary injection of capital within the financial institution?
Endure.
The place do you see the corporate going now over the close to time period?
We’re witnessing the most important seismic shift in the way in which medication are priced and distributed in US historical past. There’ll proceed to be an explosion in pharma D2C and direct-to-business will likely be a pure complement to that. This may result in many thrilling pharma partnerships each for GLP-1s and different model medication.
Corporations of all sizes will proceed to drop GLP-1 protection for weight reduction and that can create hundreds of alternatives for Andel. Many will begin reviewing their protection for different model medication or courses as effectively.
Within the close to time period, we’re centered on scaling thoughtfully, so we will develop entry via employer and pharmacy partnerships, refine the member expertise, and lay the groundwork for a profitable nationwide launch in 2026.
The way forward for pharmaceutical entry will likely be People paying membership charges for low-cost model medication, with pricing sponsored by their employer. Andel will likely be as vital as direct-to-consumer and insurance coverage to pharma producers and new medication will likely be created primarily based on the truth that they don’t have to rely upon legacy insurance coverage firms for payback.
What’s your favourite fall vacation spot in and across the metropolis?
Battery Park.
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