Investing in Photon Health
Authors: Parth Desai and Tara Sullivan
Today’s prescription drug landscape is incredibly complex. Complicated incentive structures contribute to higher drug prices, shortages, and ultimately a sub-optimal patient experience.
At Flare Capital, we’ve spent time with hundreds of companies solving for this complexity over the last several years. These companies all aspire to help patients access affordable drugs quickly. Some do this by supercharging prescribers, others by supporting retailers and manufacturers, but all by empowering other stakeholders to shepherd the patient journey.
We believe the patient should be at the center of this journey and that a prescription is inordinately more valuable when put directly in their hands. When we met the Photon Health team earlier this year, we were excited to see these beliefs come to life.
Today, we’re thrilled to announce our investment in Photon Health, a company that is building modern prescribing tools to transform the prescription ordering and fulfillment experience, while giving patients agency over their drugs.
Led by co-founders Otto Sipe, Michael Rado, and Sam Kotlove, the team brings deep pharmacy and patient-centric design experience from Thirty Madison, Walmart, and other leading organizations to the company. Their former colleagues and partners described them as “product leaders who are cream of the crop… a rare combo of technical and strategic thinkers… high integrity and here to win”. That is the caliber of team that we think it will take to win in this market, and we couldn’t be more excited to partner with Photon.
Market Opportunity
Nearly $634 billion was spent on 6.7 billion prescriptions in the US in 2022, a 9.4% increase over the year prior. An increasing proportion of these costs are also being borne by patients. Promising therapies are also in short supply, making it a challenge for patients to access treatments in a timely manner. It’s a problem we’ve seen firsthand, as many of our own portfolio companies navigate this dynamic on behalf of their patients. Ultimately, this status quo exacerbates non-adherence and avoidable care utilization.
Though 90% of patients seek to shop for more convenient and affordable drug options, they have limited agency and information to do so. This is largely due to the limitations of the traditional e-prescribing workflow. Prescriptions are often routed by a prescriber to a pre-designated pharmacy without considering factors like inventory status, pricing, or patient cost responsibility. This means that a prescription may be sent to a pharmacy that is closed, out-of-stock, or unaffordable when the patient arrives for pick up, triggering a cascade of calls or messages back to the prescriber to help with rerouting. Though prescribers and retail pharmacies are motivated to assist their patients, they are currently overwhelmed by administrative burden and financial challenges. As a result, they also have limited resources to assist patients. Enter Photon.
Photon’s Product
Today, Photon takes the administrative hassle out of the e-prescribing workflow and gives patients the agency to make informed fulfillment decisions. With Photon, prescribers maintain the EMR-based e-prescribing workflow that they are accustomed to, but instead send the prescription directly to the patient via a secure SMS link, rather than the pharmacy. On Photon’s platform, patients can shop between local or delivery pharmacies, compare choices based on price and availability, and change pharmacies as needed.
Like many, we’re bullish on the future of AI in healthcare and have seen our fair share of AI pitches over the last couple of months. We believe AI can enable powerful operating leverage, when it is tactically stitched into product workflow rather than used as a blunt tool. What we find particularly impressive about the Photon product is that it has weaved AI into its product methodically and at key value points (i.e., automating data collection, placing phone calls) that compound the quality of the user experience.
This impact shows up in patient experience data. This spring, 96% of patients who started the Photon workflow made an informed pharmacy selection via the platform. Furthermore, patients who have multiple prescriptions tend to select more than one pharmacy, reinforcing how much value Photon can drive for patients by putting information and choice at their fingertips. Not lost on us is that fact that Photon is also creating a strong prescriber user experience, with some seeing a 6x return on investment through administrative efficiency.
The Road Ahead
As Photon’s user base scales, new partnership opportunities are emerging. We spoke to executives at retail, insurance, and care delivery organizations as part of our diligence and there was a clear takeaway from those conversations. Photon’s ability to shape prescription shopping behavior at scale will allow them to develop fundamentally new cost savings and accessibility value propositions. This is the future we’re most inspired by.
Flare Capital is excited to collaborate with the Photon team alongside our friends at Notation Capital, Susa Ventures, BoxGroup, and Scrub Capital as we work to transform the patient pharmacy experience. To learn more about Photon or our other investments, please reach out to Parth Desai (parth@flarecapital.com)!
