Blink Health Ramps Up in Boston as Amazon Eyes Prescription Drugs

Xconomy Boston — 

A few months after Amazon announced a deal to acquire Boston-area online pharmacy startup PillPack, another healthcare technology venture is growing its presence here as it attempts to shake up the retail pharmacy industry.

The newcomer is New York-based Blink Health, a four-year-old startup that enables people to buy low-cost prescription drugs online and pick them up at nearby pharmacies. Earlier this year, Blink hired local technologist Bill O’Donnell to serve as its executive vice president of engineering. Previously, he was chief software architect at Kayak and Intuit (NASDAQ: INTU), and co-founder and chief technology officer at Lola.

O’Donnell says he didn’t want to move to New York, so Blink’s management team decided to open an engineering office in Westford, MA, near his home. Part of the idea was to entice talented people who want to work for a startup, but are “sick of commuting” into downtown Boston, he says. (O’Donnell’s last startup job was with Lola, an online service for planning business trips, in Boston’s Fort Point neighborhood. He declined to comment on his departure, which happened in the fall of 2016.)

“I know there are a lot of experienced senior engineers who live here, especially in the northwest suburbs where I am,” O’Donnell says.

Blink’s Boston-area office currently has 12 employees, with plans to add roughly 25 more in coming months, O’Donnell says. The company has raised at least $165 million from investors, including San Francisco-based 8VC.

Blink is establishing a presence here at a time when big corporations and startups are investing in new healthcare technologies and business models. Some believe the healthcare push Amazon and other tech giants are making has the potential to transform the industry. Many of those efforts are happening in New England.

Amazon’s (NASDAQ: AMZN) purchase of PillPack—based in Somerville, MA, and Manchester, NH—opens the door for the online retail giant to begin selling prescription drugs, which could alter the competitive landscape. (Shares of major drug distributors and retailers, including CVS Health (NYSE: CVS) and Cardinal Health (NYSE: CAH), sank the day the deal was announced.) Meanwhile, Atul Gawande, a local surgeon and author, was hired as CEO of the new healthcare venture created by Amazon, JPMorgan Chase (NYSE: JPM), and Berkshire Hathaway.

Notable healthtech activity in the Boston area includes the work at IBM Watson Health’s (NYSE: IBM) headquarters in Kendall Square, GE Healthcare’s (NYSE: GE) projects with Partners HealthCare and Boston Children’s Hospital, and a digital health lab led by startup accelerator organization MassChallenge.

Switching from building travel-booking software to online drug sales marked a transition for O’Donnell, of course. However, he isn’t totally new to the intersection of healthcare and information technology. O’Donnell has served for a decade as the IT and finance director of Stony Brook Primary Care, the Massachusetts-based medical practice led by his wife, who is a primary care doctor, he says.

“I have this side view of what healthcare is like in the U.S.,” O’Donnell says. “It’s always been interesting to me.”

His work with Stony Brook could help him in his Blink Health role because it has helped him understand “the context” of patients, many of whom are elderly and take lots of different medications, he says.

It has also given him a glimpse into the intricacies of the healthcare industry. “I deal with insurance companies on the business side of” Stony Brook, he says. “I know how infuriatingly complex that is.”

Blink is trying to help patients save money by making the process of buying prescription drugs—primarily the generic versions—more transparent and efficient. As The New York Times noted in a 2016 profile of the company, most pharmacies don’t list drug prices, and when they do, prices can vary and can cost more than the rate that insurers pay. Customers often don’t learn the price until they’re paying at the register.

With Blink, customers shop on its website for drugs prescribed by their doctor, which they pay for online. Users then pick up their medications at a nearby participating pharmacy by showing a proof of purchase.

“Blink is really trying to bring e-commerce and transparency into this very closed industry of very powerful players,” O’Donnell says.

It’s a familiar narrative. The Internet has transformed most industries over the past three decades, including travel. O’Donnell played a key role at Kayak, one of the software companies that spurred the shift from booking trips through travel agencies to booking them online.

Healthcare has been slower than most sectors to adopt digital technologies, and Blink’s path has been rocky at times. Last year, two of the largest retail pharmacy chains—CVS Health and Walgreens Boots Alliance (NASDAQ: WBA)—left Blink’s network of pharmacies, according to Bloomberg. (It still has Walmart, Kmart, Kroger, and Albertsons in its network, according to Blink’s website.)

Blink sued MedImpact Healthcare Systems, a pharmacy benefits manager that was handling Blink’s relationships with pharmacies, alleging breach of contract, Bloomberg reported. MedImpact then sued Blink for alleged fraud and misrepresentation of its product. In July, Blink worked with former leaders of Express Scripts (NASDAQ: ESRX), another pharmacy benefits manager, to create a new pharmacy benefits administration company called Blue Eagle Health, Bloomberg reported.

O’Donnell shrugs off these challenges, saying they don’t concern him and didn’t weigh on his decision to join Blink. He frames the situation as Blink taking on the industry’s large incumbents, who “aren’t going to sit around and let us walk in” and grab a piece of the market without a fight.

Blink is also battling other startups. It sued a rival firm started by former Blink executives, claiming that the company, Hippo, is using stolen trade secrets in an “unlawful copycat scheme,” according to a Business Insider report.

Interestingly, some of Blink’s experience sounds similar to what PillPack went through. The startup ships pre-sorted medications in time-stamped packs to help people take their pills on schedule, and it helps manage refill requests. In 2016, PillPack had a spat with Express Scripts, which briefly removed PillPack from its network of pharmacies. (Pharmacy benefit managers process prescriptions and negotiate prices with pharmacies and drug makers; they can also operate their own mail-order pharmacies.)

PillPack accused Express Scripts of trying to quash competition and own more of the value chain, while Express Scripts claimed the startup misrepresented itself and shipped meds to at least one state where it wasn’t licensed to do so. After public pressure from PillPack and its customers, the two sides resolved the contract dispute, and PillPack was allowed to stay in Express Scripts’ pharmacy network.

It’s no surprise that O’Donnell, who has worked in software engineering since the late 1980s, believes good technology wins in the end.

“You let the lawyers fight off the other junk and just make good software—and then you’ll eventually succeed,” O’Donnell says.

Still, he acknowledges that buying prescription drugs online isn’t as easy as purchasing a pair of shoes. For example, Blink’s customers have to input the correct dosage of a drug and make sure they select the correct pharmacy location, O’Donnell says. His team’s job is to make the process as simple as possible.

“We have to craft the experience so you pull people through the process and not lose them,” O’Donnell says. For Blink, winning and keeping customers “is not as simple as applying best practices from every other e-commerce site in the world.”

When asked about the possibility of competition from Amazon, O’Donnell spins it as a positive.

“The more players in the game, the more you know that you’re in the right game—especially when they’re a smart company like Amazon,” he says. “You see the competition out there, and if you pay too much attention to them, it’s distracting. What you really should be doing is looking at your own software and trying to make that really good. That’s the best way to compete and win.”