The promise of breakthrough prescribed drugs has created an surprising disaster in employer advantages. As GLP-1 drugs display exceptional efficacy for weight administration and power illness prevention, their prices have turn out to be 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 quite than face projected healthcare price will increase of 10% in 2026. Andel is constructing a membership platform that sidesteps the standard pharmacy profit supervisor infrastructure, aggregating worker demand throughout a number of employers to barter instantly with producers. The cooperative mannequin permits employers to contribute subsidies at no matter degree matches their funds whereas members pay a small month-to-month charge for entry, making a profit construction that doesn’t require employers to soak up the total price of protection.
AlleyWatch sat down with Andel CEO and Cofounder Jay Bregman to study extra in regards to the enterprise, the longer term plans, current fudning spherical, and far, a lot, extra…
Who have been your buyers and the way a lot did you elevate?
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 presents.
Andel is a revolution in drug affordability — a cooperative worker platform that unlocks entry to GLP-1s and different brand-name drugs. Staff want these drugs, however employers can’t afford to cowl them.
We clear up this downside by leveraging the mixed shopping for energy of our members to go instantly to producers for higher costs and a assured provide. Then, employers add a subsidy of their selecting to additional cut 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 might take an enormous swing and clear up a very powerful downside in American healthcare: model identify prescription pricing and distribution.
I noticed the facility of GLP-1s and different next-generation brand-name medicine and I puzzled why it was so troublesome for folks to entry them. It appeared like having access to generic older medicine was straightforward however actually life-changing medicines have been out of attain. It felt like a ‘miracle drug paradox’ the place pharma was inventing actually wonderful therapies however the higher they have been and extra folks that would profit the less and fewer folks have been truly 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 turn out to be 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 trade’s largest profit consulting corporations at Segal and Pharmaceutical Methods Group.
How is Andel totally different?
Andel’s platform combines producer’s reductions with employer subsidies to scale back prices for members. We ship the capabilities of a licensed pharmacy by a user-friendly digital platform that gives an unbelievable member expertise.
Finally, our purpose is to turn out to be what I prefer to name the Spotify of the drug trade: 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 earn cash by a small month-to-month charge charged to staff, our incentives are aligned with employers and staff to scale back drug prices and develop our membership as broadly as attainable.
What market does Andel goal and the way massive is it?
US prescription drug expenditures rose to $805.9B in 2024, a rise of 10.2% over the earlier yr. 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 may also carry different medicines past GLP-1s which aren’t extensively coated by insurance coverage.
Though Andel is at the moment centered on the US market, we consider 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 by to scale back the drug prices of their staff at level of sale. Staff 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 workforce. As a result of throughout financial downturns, the very first thing firms do is evaluate their advantages, and the primary profit prone to be minimize is GLP-1 protection and their pharmacy profit. That can imply they are going to be in search of 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 in search of methods to develop their payer channels, and Andel is an ideal method to tackle protection gaps and improve gross sales.
What was the funding course of like?
Ferocious. GLP-1 / model identify entry and affordability is a very powerful matter going through humanity. Andel is a chance to assist construct a large 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 simply confronted whereas elevating capital?
The drug pricing market may be very complicated and obscure. Even some very good folks assume that the answer is for producers to easily cut back costs throughout the board, however that fails to acknowledge a key tenant of insurance coverage – when you will have a product that applies to nearly 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 subsequent life-changing drugs.
What components about your enterprise led your buyers to jot down the examine?
A few of them knew me effectively and that I might execute. Others noticed the progress we had made funding it ourselves and have been satisfied we might make it occur. Past that, the market was working in our favor, the relentless concentrate on decrease costs, innovation, and extra direct options have been super-helpful.
A few of them knew me effectively and that I might execute. Others noticed the progress we had made funding it ourselves and have been satisfied we might make it occur. Past that, the market was working in our favor, the relentless concentrate on decrease costs, innovation, and extra direct options have been super-helpful.
What are the milestones you intend to attain within the subsequent six months?
Over the subsequent 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 provide firms in New York that do not need a recent 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 medicine are priced and distributed in US historical past. There’ll proceed to be an explosion in pharma D2C and direct-to-business will probably be a pure complement to that. It will result in many thrilling pharma partnerships each for GLP-1s and different model medicine.
Firms of all sizes will proceed to drop GLP-1 protection for weight reduction and that may create hundreds of alternatives for Andel. Many will begin reviewing their protection for different model medicine or courses as effectively.
Within the close to time period, we’re centered on scaling thoughtfully, so we will develop entry by 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 probably be People paying membership charges for low-cost model medicine, with pricing sponsored by their employer. Andel will probably be as necessary as direct-to-consumer and insurance coverage to pharma producers and new medicine will probably be created primarily based on the truth that they don’t have to depend 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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