Michael Rea is on a mission to make prescription medications more affordable for the masses.

The founder and CEO of Rx Savings Solutions got the idea for his company while working as a pharmacist at a Walgreens store in Kansas City, Mo. One day, a regular customer asked for his advice in a simple yet startling way.

“She said, ‘Michael, which of my eight medications should I skip this month?’” Rea recalled. “And I said, ‘Why do you want to do that?’ And she said, ‘Well, I can’t pay my rent and pay for all my drugs. I can only pay for six, so which two are least important?’”

Rea was taken aback. He told her that he didn’t like that as an option.

“I made sure she had enough pills to get to the next day,” he said. “And I told her I would go home and do some work and see if I could help her.”

Rea did help, spending six hours that night researching on the Web and making phone calls to pharmacies that were still open on the West
Coast to find a way to solve his customer’s problem.

“I kind of went back to my pharmacy school days and thought critically,” he said. “Was there another blood pressure medication she could take that was cheaper? Was there something on a $4 list at Wal-Mart that was the same drug, but cheaper? Once I started finding stuff, I thought, ‘Here we go.’ I was like a kid in a candy store.”

Rea discovered that he could save his customer about $250 a month or $3,000 over the course of a year on her daily medicines.

“It was great,” he said. “I was on cloud nine. That’s why I went to pharmacy school. That’s what I was trained to do, which was to help people and not just process prescriptions in a mini-factory environment.”

But the idea that Rea could turn such valuable consumer information into a viable online business didn’t totally click in his mind until the customer took action.

“The lightbulb moment was not just when I found the solution for her, but when she actually carried it out,” Rea said. “I gave her a piece of paper that said, ‘These are the things you should do, and this is how you’ll save,’ and then she put it into play. She no longer had to make these life decisions about groceries and rent and which drugs she was going to take.

“That’s when I decided to form Rx Savings Solutions and try to find a way to replicate the same process for more people.”

SOFTWARE SOLUTION

Rx Savings Solutions started slowly as a side venture for Rea in 2008. But the business achieved exponential growth in 2014 when it was awarded key contracts to provide prescription medication advice to employees of the state of Kansas and the BH Media Group, a Berkshire Hathaway company that operates more than 70 newspapers in 10 states.

Angel investment in the company totals $1.5 million to date, and another round of fundraising is under consideration for this year.

“We are at the right place at the right time with the right business,” Rea said.

Rx Savings Solutions’ software uses a patented clinical algorithm to locate the best prescription deals for consumers in the market. Those deals are shared via text, email and phone with the company’s 115,000 member consumers, who receive alerts based on their individual needs. The process provides pricing transparency, Rea said.

“Think of pricing this way,” he said. “When you walk into a CVS, there are an infinite number of prices for 30 pills of Drug A. If you walk in off the street, it might be a cash price of $400. With a discount card, it might be $30. With insurance, maybe you get it for $10. There are all these different prices you could pay.

“Now what if I told you that, just like your insurance network, there were 100 other networks out there that could provide you discounts? There are. And I know how to get them.”

‘A DIFFERENT SELL’

After founding RX Savings Solutions, Rea kept his day job as a pharmacist for several years because he had student loans to pay. And it took a full year to get the company’s website up and running without any financial support.

Making a profit from Rx Savings Solutions in those early years seemed like a far-off possibility at best.

“It wasn’t a funded company at that point, and I was losing a lot of money,” Rea said. “I didn’t have a marketing budget. I didn’t have resources. It was just me sticking $1,000 in here and there to keep things going or to attend a conference and try to get the word out.

“Simply put, we started out as a direct-to-consumer enterprise. But, in the end, the way to the market was through employers. It was a different sell. It wasn’t a sell to the individual. It was a sell to the employer to reach the individual. And that was a three-year lesson.”

THE BIG LEAP

Things changed in 2011, when a representative of the Mutual of Omaha insurance company called Rea.

“All this pressure was beginning to mount around the Affordable Care Act and pricing for drugs and medical procedures,” he said. “So they needed to provide value to their customers, and they wanted to know if we could help employers save money.”

Rx Savings Solutions was still a one-man operation. So Rea called upon a friend from pharmacy school, Doug Besch, who would become company COO, to help with the lengthy process of examining massive sets of insurance claim data to determine if Rx Savings Solutions could indeed effectively partner with Mutual of Omaha.

“At the end of eight months, they liked what they saw, we got a contract, and we moved forward,” Rea said. “That was absolutely the catalyst for the company and what it is today. That single contract was a huge piece of why I left my pharmacy job, which was a good job, and really kind of the first domino to fall from a business success standpoint.”

The immediate challenge for Rx Savings Solutions was to build out the necessary tech component that would allow the company to deliver on its promise to Mutual of Omaha.

“We knew there were a lot of claims and data coming,” Rea said. “And we needed to harness the power and the knowledge that we had in our brains into a software program.”

MAINTAINING FOCUS

To make that happen, Rea brought on board IT designer Bo Lais as his chief technology officer. Another vital addition to the company has been chief strategy officer Drew Komenda, formerly of Johnson & Johnson, who leads the sales effort.

“The executive team that we have is just awesome,” Rea said. “They make this job easier for me. They drive the company. Steve Jobs said that he’d rather take a couple A players and run circles around a big team of B players. I really think that’s true. And I’ve been fortunate enough to get those A players.”

In addition, Rx Savings Solutions has increased its entire staff by tenfold over the past year.

Looking back on the origin of his company, Rea views his interaction with that first customer, who has since passed away, as fundamentally “the same thing that we do now.”

“It’s finding efficiency and producing information that people have a right to know, saving them money and getting them to a better place in their health,” he said. “Would I suggest Rx Savings Solutions to her? I would. We don’t make suggestions that are iffy.”