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Will Direct-To-Consumer Services Transform Health Care?

Using telemedicine to interview patients and prescribe for them reduces cost and improves accessibility. Does it have any downsides?

By Andrew Feld

“Donuts were my Kryptonite.” Aren’t they everyone’s? But they were especially so for Josh, a character based on a real person who described his sweet tooth in a commercial for the popular direct-to-consumer healthcare company, Ro. “Mental toughness was no match for a maple bacon donut,” Josh says — until a physician working for Ro prescribed him a popular GLP-1 weight loss medication that squashed his cravings, helping him lose 33 pounds in five months. At the end of the ad, Josh — costumed in military fatigues — exults: “ GLP-1s are like a military mindset in a shot!” 

What’s remarkable here is not that GLP-1s work. It’s that the pesudonymous Josh could access these novel, expensive medications without ever needing to physically visit a doctor. That’s the premise of direct to consumer (DTC) sites such as Ro. They utilize telemedicine to provide healthcare. 

Weight loss drugs are just one such service line. Medications for hair loss, erectile dysfunction, acne and fertility are also offered, so long as one of the company’s in-house doctors writes a prescription. 

The process is pretty straightforward: first, patients navigate to a site offering treatments for the condition they have. Next, they click on the medicine they want and then complete an initial questionnaire that asks for height and body weight, reasons for wanting the medication and current medications and diseases. That questionnaire then gets reviewed by a doctor who then messages the patient through the company’s app whether or not they are writing the prescription. Finally, patients who qualify for treatment wait in your home: the medicine typically gets delivered to your front door.

That patient journey may seem unorthodox, but in today’s healthcare system it’s becoming more and more common. DTC companies are flourishing, and are fundamentally changing the way patients engage with healthcare. 

Photo by i yunmai on Unsplash

Breaking Barriers with Telemedicine

“Direct to consumer health care is a form of healthcare where a patient can call or go online and essentially have a straight path to talking to a provider that they may have never known before,” said Krisda Chaiyamchai, MD, MPH, MSHP, senior medical director for care delivery at Verily. “By doing so, they gain access to services that can range from counseling for mental health needs or a disease condition to managing lifestyle choices and even into prescribing medications too.”

Patients seem to enjoy giving these companies business. Easier access to doctors, transparent drug prices and convenient delivery are just a few reasons why revenue for the direct to consumer industry totaled $310 billion in 2022 and is expected to grow to $614 billion in 2026, an 18 percent compound growth rate.

But what does it mean for patients that they can obtain healthcare from companies that are more like Amazon than like a typical doctor’s office? DTC companies contend they offer patients access to care, lower cost and safety. Let’s look at each a little further.

DTC companies do a couple of things. First, patients who already have access to a doctor can do so more conveniently, without taking time off from work — time that could go unpaid. Nor do they have to pay for transportation or parking or face the less tangible but still real time costs of sitting in a waiting room. 

The virtual aspect also allows people to complete the questionnaire on their time. That means workers who log long shifts won’t have to resort to going to the only place open at the time they get off work: urgent care or emergency departments. Dr. Chaiyachati said that before joining Verily, employees were traveling to the ER for conditions that could be treated in a less acute setting. 

“We were looking at our own internal data and realizing basically almost all our employees who were seeking emergency department urgent care were doing it at odd hours of the night,” said Chaiyachati. “They had a demand for care, and the only option for them were places that are open 24/7, like an urgent care or emergency department. [That’s} challenging because those are the most expensive places to provide care for kind of low acuity conditions.” 

Verily responded to this trend by offering a 24/7 telemedicine service so employees had another option to receive care during the odd hours. 

“If it was truly something that required an in person [visit] we then had direct connection points same day, next day in person appointments at many of our locations,” said Chaiyachati. “So I was doing a triage system of , ‘Oh, we can address your needs. We’ll take care of it now and you can avoid going to the ED or urgent care.'”

Photo by Alexander Grey on Unsplash

DTC companies provide care to another swath of the population: people whose alternative to virtual care is no care at all. Nearly 20% of Americans live in rural areas yet less than 10% of doctors practice in those locations. 

“We have a number of different geographies where we have what are called specialty deserts,” said Neil Parikh, chief medical officer at Thirty Madison, also a DTC company, “large counties or beyond where there may be one or none specialists across the variety of different services that we provide. And that gap is a very serious problem for patients.”

Thirty Madison attempts to solve that gap by allowing people to access doctors specialized in the areas where they need care — for instance, with Cove, their treatment line catered towards migraine sufferers. The American Headache Association estimates 55 million Americans suffer from migraines. Fewer than 700 migraine specialists exist to treat them. Sure, some of these people can likely get treatment through a non-migraine specialist; but, 55 million is so large a number that there’s certainly people who need to see a migraine specialist but cannot for the sole reason of living in a “specialty desert.”  

Making Costs Transparent

DTC companies improve access, but they also try to do so at an affordable cost. 

Traditional health insurance involves a lot of moving pieces: deductibles, in-network/out of network, prior authorization, etc, but one thing absent from that list is price transparency. Trying to figure out what a procedure or medication costs is not a straightforward process, as anyone who’s had to call their health insurance company can attest. 

DTC companies pride themselves on price transparency. It’s part of making healthcare easier to access. For example, Ro lists 50mg of generic Viagra at $6. A monthly supply of generic Zoloft costs $24. 

Drugs can be more or less expensive than what they’d cost with insurance depending on where they land on a pharmacy benefit manager’s (PBM) formulary. Optum Rx, Express Scripts and CVS are the three largest PBMs and they operate in a similar way to a health insurer, just for pharmacy benefits. Whereas health insurance companies negotiate prices with hospitals and doctors to determine which providers fall “in network” or “out of network”, PBMs negotiate drug prices with pharmaceutical companies and wholesalers to help determine where a drug falls on the formulary, if at all.   Typically, low cost generic drugs — like the generic form of Viagra — fall into Tier 1 while expensive generics and brand names sit in Tiers 2-4. Drugs not in the formulary are not covered, so must be fully paid for by the patient. 

Pharmaceutical companies want to see their drug in Tier 1, because patients are more likely to buy a low-cost drug than a high-cost one. But maybe the pharmaceutical company wants to sell their drug at a higher price than what the PBM believes is fair, or maybe there is a similarly effective drug that is much cheaper. Both those reasons can cause a drug to drop to a lower tier.

“The process of going through your insurance benefits and then through that PBM formulary can sometimes make [generic] drugs more expensive,” said a Ro spokesperson. “But with generics that happens sometimes and so Ro has relationships for its pharmacies in the pharmacy supply chain and can access supplies and medications at scale and pass along those savings to patients.”

Ro only accepts cash payment, no insurance. They prefer to avoid the hassle of dealing with pharmacy benefit managers. Thirty Madison takes a different approach. Their Nurx service line, which focuses on women’s reproductive and sexual health, offers patients the option of paying a cash price or using their insurance for some products. This lets patients choose the cheapest payment method. 

“We have very broad coverage of our [Nurx] medications in terms of PBM reimbursement and coverage,” said Parikh. “Wherever we have coverage, we offer it back to patients. At the same time we present cash price options and ultimately make it a patient choice on whether they want to be able to use their insurance benefit or pay out of pocket.”

Making a proper comparison of a drug’s price with and without insurance is difficult. It all depends on what the PBM’s formulary looks like. For example, Nurx provides minocycline (50mg) oral capsules. A 30-day supply costs $40 with no insurance. Amazon pharmacy offers the same medication and lists the average price with insurance at $5, but notes that the price varies. With Amazon however, patients need a non-Amazon doctor to write out a prescription to Amazon pharmacy. Thirty Madison and Ro own the doctors and pharmacies, making the process much more streamlined. Patients may be willing to pay more for this convenience. 

And this whole discussion ignores the 26 million uninsured United States citizens who have even more incentive to get medicine through a DTC site. Their price transparency alone makes them more appealing than facing the uncertain costs of getting medicine without insurance. 

Safety Concerns and Solutions

The whole DTC area is new — Ro, Hims and Hers and Thirty Madison were all founded in 2017 — and as a result federal agencies have barely caught up. This is a problem, because for all its benefits of cost and access, the business model exposes companies and patients to two possible risks: misrepresentation by patients, and lack of access to information on the part of the companies.

Imagine, for instance, that a patient claimed to be someone else on their initial intake form. That could hypothetically allow them to obtain the same medications via more than one prescription, facilitated by the DTC company physician never seeing the patient’s face. That thought experiment leads to a larger question about patient integrity: How can a doctor reading a self-reported questionnaire know whether a patient is telling the truth?  

The platforms say they have ways to combat this. Thirty Madison, for instance, requires patients to submit identity verification and even talk to their insurance company, if they have one. But the possibility of dishonesty remains. “Is there a possibility that a patient is not forthright with us?”, asks Parikh. “Of course, that is possible. But it’s no different than a patient not telling me, as a provider, the accurate information in a brick and mortar or video type setting.”  

In a clinical setting, though, a provider might check a patient’s condition against their past medical history. With the DTC companies, this does not occur: They do not access patients’ medical records. Thirty Madison calls this out in their terms and conditions: “A lack of access to your medical records may result in adverse drug interactions or allergic reactions or other judgment errors.” 

Thus, DTC doctors cannot check what other medications patients are taking or what allergies they may have. Since patients do not always remember the medication they are taking, this poses a problem. A 2007 health literacy study from Northwestern University Feinberg School of Medicine found that almost 50 percent of patients forgot the name of the high blood pressure medication they were taking. And as other research has shown, more than two-thirds of patients who receive medication from a DTC do not tell their primary care doctor about the online prescription. 

Looking toward further growth

The DTC sector continues to expand, because healthcare consumers are demanding quicker access to care. Average wait times for an initial appointment with a doctor were 26 days in 2022. Most DTC sites match patients with doctors in two or three days. 

At the mment, most DTC sites primarily treat lower-acuity conditions that represent lifestyle concerns: sexual health, skin care, fertility and hair loss. The companies are already looking to change this. “[DTC healthcare] doesn’t need to be limited to low acuity conditions,” said Parikh. 

A publication by the consulting firm McKinsey notes that virtual hospitals for high-acuity conditions are already being explored in Australia and the United Kingdom. Intravenous drips, infusion pumps and vital-sign monitors are being brought to patients rather than the other way around. Trips to the hospital are turning into trips to the living room. As this trend evolves, DTC companies will require more scrutiny and regulation, particularly while personal medical information remains out of their purview.