💊 Can digital health solve the $300 billion medication adherence problem? Hear me out.

Plus: What Optum's new CEO has to say about the future of the company

Happy Monday!

This past semester, I oversaw an independent study with my MBA student Ken Kobayashi, MD (CBS ‘25). When Ken came to me with his idea to analyze medication adherence startups, all I could think about was the graveyard of D2C medication reminder apps and smart pill dispensers. I gave my typical lecture on how the biggest barrier to medication adherence is the high cost of drugs, and how these tools just add costs without solving the real problem.

But he came back with a thoughtful analysis, which we worked through all semester. Looking at the companies working in this space, and the creative business models they have developed, I have renewed hope that digital health can move the needle for medication adherence.

If you’re working in this space and we missed your company, please comment in the Substack app! We’d love to hear from you!

Americans spend twice as much on prescription drugs as our peers in other wealthy nations, but we’re not very good at taking them as prescribed. This is called medication adherence, and it’s the extent to which patients take medications as prescribed, including taking the right dose at the right time.

Here’s how big the problem is:

💊 Roughly half of patients do not take their medications as prescribed.

🪦 There are about 125,000 preventable deaths per year in the United States due to medication non-adherence.

🚑 Between 33% and 69% of medication-related hospital admissions in the U.S. are due to poor adherence.

💵 The total cost estimates for non-adherence range from $100 to $300 billion each year.

This is an enormous opportunity to improve healthcare, and it's a market where acquirers have consistently demonstrated their willingness to make significant investments. Startups touching medication adherence (directly or indirectly) have produced some of the largest exits in digital health, like GoodRx ($19.4B IPO*), Shields Health Solutions ($1.37B), CoverMyMeds ($1.1B), PillPack ($1B), RxSavings Solutions ($875M), and Propeller Health ($225M).

In this article, we'll explore how digital health companies are making real progress in improving medication adherence.

*GoodRx’s market cap as of May 2025 is $1.68 billion

How digital health is tackling the adherence challenge

We broke down the solutions in this space into four categories:

1. Solutions addressing patient forgetfulness or confusion, to help patients take the right medication at the right time

2. Those addressing the massive problem of prescription drug affordability (the #1 reason a patient leaves the pharmacy without the medication they were prescribed)

3. Solutions removing barriers and improving the convenience and access of prescription medications

4. Tools aimed at helping the care team—pharmacists, clinicians, caregivers—help patients

🎗️ Helping patients take the right medication at the right time

Several approaches aim to address forgetfulness and confusion:

• AllazoHealth enables pharmaceutical companies to deliver highly targeted messages to patients by using AI to predict individual medication behaviors and deliver personalized communication (reporting a 12.2% increase in adherence).

• Alex Therapeutics builds therapy companion apps for cancer and rare disease patients, paid for by pharma. These apps help patients manage the psychological challenges of treatment and track medication and side effects.

• Wellth uses gamification and financial incentives (paid for by health plans, employers, and providers) to reinforce adherence habits.

• Smart pill organizers such as MedMinder (acquired by PersonalRX), HERO, and MedaCube help patients manage their medications by providing reminders and automated dispensing features.

• Smart pill bottles like those from Pillsy and TimerCap track medication use and notify patients when doses are missed.

• Home assistant pill dispensers such as Catalia Health and Spencer Health Solutions help patients by automating medication dispensing while integrating with telehealth platforms to provide additional support.

• Medisafe, Dosecast (Montuno Software, Inc.), and EveryDose provide AI-driven medication tracking and reminders.

💸 Making medications more affordable

Cost remains a major, if not the biggest, barrier to medication adherence. Several companies are working to address it:

• GoodRx and Mark Cuban Cost Plus Drug Company offer greater price transparency and discounts on prescription drugs.

• RxSavings Solutions (acquired by McKesson for $875M) helps insurance companies optimize costs by giving medication alternatives to patients.

• Sempre Health allows health plans and pharma companies to offer lower co-pays to patients for picking up their medication on time.

• Amazon RxPass, which provides a subscription model for generic drugs, has been shown to increase medication days’ supply by 27% while reducing out-of-pocket costs by 30%.

• BlinkRx helps patients access medications by connecting them with a network of pharmacies and leveraging their insurance to find the lowest possible price.

🛒 Improving convenience and access

Getting medications can be surprisingly difficult. Digital solutions include:

• CoverMyMeds (acquired by McKesson for $1.1B) streamlines the prior authorization process to help patients access medications faster.

• Capsule, Pills2Me, and Alto Pharmacy (soon to be acquired by Paulus Holdings for $1B+) are online pharmacies that offer same-day delivery, helping patients stay on track with their medication regimens.

• PillPack (acquired by Amazon for $1B) is an online pharmacy offering pre-sorted packaging for patients on multiple medications.

• CarelonRx, the pharmacy benefit manager of Elevance Health, offers a digital platform for users to compare medication costs, track prescription statuses, and receive home delivery.

• Alchemy Health (in which I’m an investor) and Clearway Health work with hospitals to build specialty pharmacy programs, embedding pharmacy support into care teams to improve access and outcomes, especially for underserved patients.

• Courier Health offers a patient-centric CRM platform for biopharma companies, integrating data and automating workflows to enhance medication adherence and streamline the patient journey.

🛠️ Tools for the care team

For long-term adherence, care teams and pharmacists require real-time insights to support patients effectively. Often referred to as Medication Therapy Management (MTM), these tools use AI to address clinical and social drivers of adherence.

• Arine offers an AI-powered medication management platform that analyzes clinical, behavioral, and socioeconomic data for health plans, at-risk providers, and PBMs to deliver personalized interventions.

• Arrive Health (formerly RxRevu) integrates with the EHR, providing prescribing physicians with cost, formulary, and benefits data for each patient they see.

• Scriptology (acquired by RxLive) combines clinical expertise with technology, offering personalized medication plans and virtual care delivery to optimize medication management.

• Shields Health Solutions (acquired by Walgreens for $1.37B) integrates pharmacists into care teams to help patients navigate complex regimens.

• RxAnte (a subsidiary of UPMC Health Plan) leverages predictive analytics and machine learning to identify at-risk patients, providing health plans with targeted adherence strategies.

• Scene Health enhances adherence through asynchronous video check-ins, ensuring patients, particularly those on Medicaid and Medicare, take their medications as prescribed.

• AiCure employs AI-driven analytics to enhance engagement in clinical trials, providing adherence insights to trial sponsors and pharmaceutical companies.

How to make medication adherence solutions that stick

Successful medication adherence solutions follow a few key principles. They solve real problems for patients, fit into existing healthcare workflows, and have a clear stakeholder willing to pay. The companies that nail these fundamentals are the ones attracting serious investment and acquisition interest.

If you’re building in this space, here are a few key things to keep in mind:

Solve patient pain points, especially cost

This is true for all of digital health: solutions that address patient pain points gain far more traction than those that add burden or expense. In medication adherence, the biggest pain point is the cost of drugs.

While lowering costs might not traditionally be thought of as a medication adherence strategy, in the U.S., lowering or clarifying costs is one of the most effective levers we have. Digital health startups that help patients access affordable prescriptions, either by reducing prices or enhancing price transparency, have a clear edge.

Take industry darling Mark Cuban’s Cost Plus Drugs. Launched in 2022, this startup bypasses traditional pharmacy middlemen (PBMs) by selling generic drugs online at a transparent and modest 15% markup plus a $5 fee​. By reducing costs, Cost Plus Drugs has quickly gained traction as a more consumer-friendly pharmacy model.

In contrast, some high-tech solutions have struggled because they add cost without commensurate benefit. Smart pill bottles and ingestible sensors are a cautionary tale. Remember Proteus? They developed an ingestible sensor pill to track if patients took their medication. The sensor-equipped pill (Abilify MyCite) launched at $1,650+ per month, more than triple the cost of the drug otherwise. Not to mention, Proteus may have picked the wrong first market by serving patients with schizophrenia and bipolar I disorder, who may already be reluctant to surveillance. The company burned through cash and ultimately went bankrupt in 2020​.

Clinical outcomes above all else

Simply tracking whether patients take their medications isn't enough—the real goal is better health and lower costs. A Cochrane review found that many adherence programs improve short-term pill-taking but don't affect actual health outcomes.

Out of all 182 studies they looked at, only 17 were considered high-quality with reliable methods. These better studies typically used complex approaches with multiple strategies, like having pharmacists provide ongoing personalized support, intensive education, counseling (like motivational interviewing or cognitive behavioral therapy), daily support with medications, and sometimes family or peer support.

However, even among these 17 high-quality studies, only five showed improvements in both medication adherence AND patient health outcomes. There wasn't any clear pattern showing which specific approaches worked best. And even the most successful interventions only produced modest improvements in both adherence and health outcomes.

Personalization > generic solutions

One-size-fits-all approaches to medication adherence are giving way to highly tailored solutions powered by AI. Companies like Arine are using machine learning to analyze clinical, behavioral, and socioeconomic data to create truly personalized interventions that address each patient's specific barriers to adherence.

These AI-driven approaches go beyond simple reminders. They look at patterns in patient behavior, medication history, social determinants of health, and even communication preferences to create strategies that actually work for each individual. Arine's platform, for instance, can determine if a patient's non-adherence stems from cost concerns, side effects, forgetfulness, or misunderstanding, and then tailors interventions accordingly.

When interventions are tailored to individual needs rather than generic reminders, adherence rates improve significantly. Using prescriber analytics, one Arine client reduced behavioral health polypharmacy by 45% to 55% for its members and achieved a 20% increase in adherence to behavioral health medications.

Figure out your business model early

Even when solving a real patient problem with a great, condition-tailored product, a digital health startup will fail if it can’t find someone to pay for it. A common pitfall for startups is to create a product that technically benefits patients, but has no sustainable reimbursement or revenue model because it’s unclear which stakeholder finds enough value to cover the cost.

On paper, better adherence benefits everyone: patients stay healthier, payers avoid expensive hospitalizations, providers meet quality metrics, and pharma companies sell more medication. However, the timeline and magnitude of these benefits vary, and so does each stakeholder’s willingness to pay.

To navigate this, startups must identify early on whose problem they are truly solving, and who will derive enough value to pay. There are a few models that can work, but each requires aligning with stakeholder incentives:

• Drug companies might fund adherence tools to improve how well their medications work

• PBMs (Pharmacy Benefit Managers) may adopt solutions that reduce prescription costs or improve formulary management

• Pharmacies can benefit from increased prescription fills, improved patient loyalty, and enhanced clinical service revenue

• Health plans could invest if they see proof of cost savings in the short term (~1 year)

• Employers might pay to reduce absenteeism or long-term expenses

• Providers may incorporate tools that help them deliver better care more efficiently or succeed in value-based payment models

• Patients typically expect free or low-cost apps, limiting direct sales potential

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🎧 New podcast episode

Over 160 million Americans are served by Optum, yet many still don’t fully understand what it actually does—or why it matters.

Dr. Patrick Conway, newly appointed CEO of Optum and former head of CMS Innovation Center and Blue Cross NC, joins Steve for a wide-ranging discussion on the state of healthcare delivery, affordability, and the potential of value-based care at a national scale. With experience spanning the frontlines of medicine to top government and corporate leadership, Conway breaks down how Optum aims to improve care while controlling costs—and why he continues to practice as a pediatric hospitalist on weekends.

Tune in wherever you listen to podcasts! Apple | Spotify

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