After Feuding With Drug Middlemen, Startup Fields a Competitor

(Bloomberg) -- Blink Health, a startup that helps patients shop for low-cost prescription drugs online, has helped set up a new pharmacy-benefit administration firm after big drugstore operators balked at filling orders placed through the service.

Blink said on Wednesday that it had partnered with former officials of Express Scripts Holding Co. to create Blue Eagle Health, which it characterized as an alternative to large pharmacy-benefit managers who have been criticized by the Trump administration for their role in driving up drug costs.

The venture “is replacing a complicated and opaque” pharmacy-payment system, said Geoffrey Chaiken, Blink’s chief executive officer. “We let pharmacies know exactly what they are going to get paid when they fill a script.”

Blink’s website and mobile app allow customers to pay online for prescription drugs and pick them up at the pharmacy of their choice. But it ran into trouble last year when CVS Health Corp. -- which also runs a large pharmacy-benefit business -- and Walgreens Boots Alliance Inc. stopped filling prescriptions ordered through the site.

CVS said that it “made a business decision” to stop filling prescriptions from Blink Health. “That decision has not changed,” it said in a statement.

Walgreens declined to comment.

Blink, which has raised $165 million in venture-capital funding, is now trying to rebuild its pharmacy network. In November, it sued MedImpact Healthcare Systems Inc., which was responsible for Blink’s pharmacy relations, alleging breach of contract. MedImpact, in a countersuit alleging fraud, said that Blink misrepresented its product.

MedImpact didn’t immediately respond to a request for comment.

Improving Transparency

St. Louis-based Blue Eagle began processing prescription purchases on Blink’s site in late March, Blink said in a statement, and now has a network of more than 33,000 pharmacies, including independent pharmacies, regional chains, and Walmart Inc.

Blink does not own a stake in Blue Eagle. But Susan Lang, Blink’s new chief strategy officer and a former Express Scripts supply chain official, was involved in setting up the venture.

“We focus on benefiting patients and pharmacies by improving transparency,” said Thomas Luft, president of Blue Eagle and another former executive at Express Scripts. He said the company is set up to take other clients eventually, but for now is focused on its Blink partnership. He declined to disclose Blue Eagle’s owners.

In addition to trying to rebuild its network, Blink faces potential competition from Amazon.com Inc., which said in June it was buying the online pharmacy startup PillPack.

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