A New Model to End the Misery of Pharmacies - OZY | A Modern Media Company

A New Model to End the Misery of Pharmacies

A New Model to End the Misery of Pharmacies

By Eugene S. Robinson

Close-up of senior black woman sorting weekly medication. Member of a black middle class America family.
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WHY YOU SHOULD CARE

Because dying from medicine you didn't take makes no sense at all.

By Eugene S. Robinson

  • Alto Pharmacy, which automates the hell that is getting a prescription filled, is now valued at more than $1 billion.
  • Co-founder and CEO Mattieu Gamache-Asselin, 30, is Métis, part of one of the three recognized Aboriginal peoples in Canada, and hails from a town of 4,000 outside of Ottawa.

“This no personal contact thing for 12 months?” Mattieu Gamache-Asselin, on a video call from Palo Alto, California, rolls his eyes upward and exhales. “I’ve had enough of that.”

It’s heartfelt, and pre-interview it has little to do with the origin story for Alto Pharmacy, the five-year-old company the 30-year-old Gamache-Asselin started with 31-year-old Jamie Karraker. Or does it? Born out of bullshit sessions that trended toward answering “You know what I hate?” with a very real desire to make life a little less miserable, you can’t get more personal than the medicine you put in your body. The result? A kind of Spotify of pharmacies: an all-digital free home delivery system for your meds.

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Co-founders Mattieu Gamache-Asselin (left) and Jamie Karraker.

So it was that Gamache-Asselin and Karraker did that whole money-with-their-mouth thing and set out to buy an actual pharmacy in order to learn the business and see if it really needed to be as bad as it was. Did we really have to suffer through wait times, prescription screwups, billing inaccuracies and just physically having to be there no matter how sick you were to get your medicine? Not to mention that the Annals of Internal Medicine estimates 125,000 deaths per year can be tied to not adhering to medication regimens — whether the prescription was never filled or it was taken improperly.

We weren’t going to try to change the insurance companies.

Alto Pharmacy Co-founder and CEO Mattieu Gamache-Asselin

“So we just drove around the San Francisco Bay Area and walked into pharmacies to see if they’d sell us the business,” Gamache-Asselin says of his company’s unlikely creation story. “And finally someone said, ‘Umm … yes.'” So Gamache-Asselin and Karraker set about finding out what apparently every independent community pharmacy owner knows: It is hell out there, despite pharmacies in the United States being a $35 billion market.

“I was making $2 million a year,” says Southern Californian pharmacist Odette Leonelli, whose days of owning her own pharmacy ended ingloriously a few years ago. “And I drove a Toyota Prius. There was literally no profit for me.”

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Using a prescription for insulin as an example, Leonelli lays out the problem. “It costs $375 a bottle,” she says. “The PBMs [pharmacy benefit managers] and insurance companies reimburse me $299. CVS has their own insurance company and Amazon has $26 billion and can’t be stopped. So I’m laughing at the idea of fixing the pharmacy world.” Leonelli, for her part, now makes her money working for a friend’s veterinary pharmacy because it’s a cash-based business.

“Well, we decided to do it because we wanted to make a real social impact,” Gamache-Asselin says. So they asked questions about cost, access and care, and wondered if they could remove the obstacles to both serving the customers well and running a profitable business. “But it became clear that it’s extremely difficult,” Gamache-Asselin sighs. “And is about much more than health care.”

A fact much more comfortably grasped by dint of his early life in Canada. He grew up in Penetanguishene, a small Ontario farming town of 4,000 that borders Georgian Bay by Lake Huron, with a pilot father, a mother who was a teacher and a very protective older brother who is now a cop. Gamache-Asselin credits coming from a caring culture — six generations of folks from the Native American Menominee tribe from Drummond Island, Michigan, and the Assiniboine tribe from Manitoba, Canada — for how he’s approached the problem of prescriptions.

“It is a very close community where everyone supports each other, with a culture that is down-to-earth and humble,” Gamache-Asselin says.

So in building Alto, the first thing they did was to realize that “we weren’t going to try to change the insurance companies,” Gamache-Asselin says. But they would centralize their businesses with locations in cities — initially Denver and Dallas — and cover a 50-mile radius doing what community pharmacies used to do best.

And they’d do it by moving beyond the pharmacy mainstays of faxes, paper and phone calls to get business done. Because most of that business would now be done online.

They’d also make it unnecessary for you to even show up at the pharmacy. A nice-to-have idea pre-pandemic, this has now become a must-have if you’re dealing with immunocompromised customers. In its first four years, the company — initially known as ScriptDash, a name they killed because according to Gamache-Asselin, it just didn’t roll off the tongue — delivered more than 1 million prescriptions. That’s 1 million people not standing on line at any brick-and-mortar pharmacy. That’s 1 million people not throwing up their hands and saying “screw it,” they’ll get their meds some other time.

And those people have helped give Alto Pharmacy far stronger loyalty marks than traditional pharmacies: Its Net Promoter Score has beaten the industry average by more than 30 points on a 100-point scale for four years running. Backed by a $250 million investment this year from SoftBank and others, Alto is now operating in California, Nevada, Washington state, New York and Colorado, providing a leg up on the competition. And competition is coming with Amazon’s recent purchase of PillPack, an entry to the market Gamache-Asselin shrugs off.

“It’s not my concern,” he says. “Competitively speaking, Alto makes money the same way as traditional pharmacies — we fill prescriptions and bill insurance companies, or some patients pay cash. But one Alto pharmacy can cover the same geography as 400 chain pharmacy locations. Given the hundreds of billions spent each year at retail pharmacies, despite the terrible service and experience they offer, we’re confident we are building a thriving business with our model.”

His confidence is born of the fact that he sees Alto as just an accelerant to the inevitable. It comes into clearer focus when he discusses exactly why it was that they changed the name from ScriptDash to Alto. “The whole team decided that it had a calmness to it, and that’s what we aspire to be: a compassionate and calming presence.” Which, when considering life and death, is precisely what the doctor ordered.

Correction: An earlier version of this story incorrectly stated that Alto operates in Texas. This story has also been updated to clarify that Gamache-Asselin is Métis, a Canadian group with both indigenous and European ancestry.

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