Disrupting Pharmacy Benefit Management: RxParadigm Launches to Restore Drug Industry Competitiveness and Reduce the Costs of Prescription Drugs for Americans

PBM insider Mesfin Tegenu opens a new business to shake up prescription drug market

CLAYMONT, Del.–(BUSINESS WIRE)–#PBM–A seasoned veteran of the prescription drug industry has broken ranks with the status quo and launched a new business to inject more transparency and competitiveness into how drugs are marketed and distributed in the United States.

Mesfin Tegenu negotiated billions of dollars of prescription drug contracts with leading pharmaceutical companies over a 25-year career. Now, he intends to use his new company, RxParadigm, to rework the opaque system of how drug rebates are offered and how drug prices are negotiated to reduce costs and increase the availability of life-saving therapeutics to the American public.

RxParadigm will focus on increasing competition in a powerful, yet little understood channel, Pharmacy Benefit Management (PBM). Originally conceived in the 1960s, PBMs were created to aggregate the buying power of several insurance companies to drive down drug prices. But as the channel became more concentrated and drug pricing became shrouded in a secretive system of manufacturer rebates, the original intent was lost. The result is seen in ever-escalating prescription drug costs for providers and patients.

Net spending on outpatient prescription drugs is expected to rise by more than 5% annually between 2020 and 2028. One way to keep drug costs in check is to encourage healthy competition – something currently lacking in the PBM market due to mega-consolidation that’s depriving the industry of innovation, flexibility, quality, and transparency.

The Prescription for Lower Drug Costs

RxParadigm seeks to disrupt the industry by leveraging the combined power of regional health plans and the many like-minded PBMs who are slowly losing their customer base to the consolidated market. RxParadigm will then take the unprecedented step of returning all negotiated rebates to regional plans and like-minded PBMs so that these struggling firms can build more innovative and competitive business models, leveling the playing field, and reducing drug costs through market competition. To audit the savings, RxParadigm uses blockchain technology to deliver unparalleled transparency across the entire prescription drug ecosystem.

“For all intents and purposes, transparency and competitiveness do not exist in the prescription drug market because of an outdated drug rebate negotiation culture that allows a select few companies to see higher margins and, in turn, dominate the entire prescription drug ecosystem,” said Mesfin Tegenu, the founder and CEO of RxParadigm. “Rebates were supposed to provide discounts based on quality and control, but now they simply guarantee that a few players receive the greatest economic benefit, effectively locking out competition from regional plans and midsize firms.”

Building a More Competitive and Agile Marketplace

To make these cost savings a reality, RxParadigm offers members a range of tools, allowing, for the first time, regional plans and like-minded PBMs to craft a range of solutions that best meet the needs of providers and patients.

“Until now, some PBMs and regional plans did not have the resources to invest in the kind of forward-thinking, patient-centric solutions that improve outcomes and reduce the total cost of health care,” Tegenu said. “Using advanced medication adherence technologies, flexible claims processing, and AI, we offer an array of patient compliance and monitoring tools so payers can see additional cost savings by choosing RxParadigm participating PBMs.”

Perhaps the most forward-thinking of these tools allows patients to receive drug discounts directly at point of purchase, allowing providers to meet a Medicare mandate ahead of a 2022 deadline.

“We foresee much of these savings to be passed directly to patients in the way of lower out-of-pocket costs for their prescription drug needs,” said Tegenu.

A Market Ready, Willing and Able to Compete

Response to the RxParadigm model has been nothing short of dramatic.

“The entire industry realizes that the basic inequalities inherent in the current system, where a few large players receive the greatest rebates, have stifled competition and fueled drug cost increases,” said Moses Asom, CEO of Trans-Sahara Investment Corporation, which became a charter member of RxParadigm in January of this year.

“RxParadigm opens up the current market by providing full transparency into unit cost discounts throughout the channel. With new strategies to increase the buying power of retail pharmacies and make them more competitive, the industry can now provide more services to the client. These initiatives are long past due and are sure to foster a more responsive and less costly health care delivery system.”

About RxParadigm

RxParadigm delivers transparency and competitiveness to the prescription drug marketplace. Founded by industry veteran Mesfin Tegenu, RxParadigm is reworking the opaque system of how prescription drug rebates are offered and how drug prices are negotiated to reduce the cost and increase availability of life-saving therapeutics to the American public. By neutralizing the PBM market imbalance, RxParadigm provides regional plans and pharmacy benefit management companies with the same economic advantages their larger competitors enjoy, along with the tools they need, including ease of payment for gene therapy, to differentiate themselves and provide more value to the marketplace.



Denise DiMeglio


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