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Startup Proximity Aims to Smooth Drug-Discount Program for Hospitals
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By Brian Gormley, WSJ Pro
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Good day. A federal program that allows certain healthcare providers to buy drugs at a discount is a godsend to many hospitals–but a headache to manage. Startup Proximity aims to change that.
The 340B program–so named for the statutory provision that created it–requires drug companies to sell medicines at discounted prices to eligible healthcare providers. In 2023, those providers bought $66.3 billion in drugs through 340B, according to the federal Health Resources and Services Administration. The program has grown controversial as it has expanded, with the pharmaceutical industry saying some hospitals are charging more for drugs they got at lower prices, and calling for rebates instead of upfront discounts.
The discounts, however, bolster the finances of participating providers—particularly those serving large proportions of patients covered by Medicare and Medicaid, which pay lower reimbursement rates than commercial insurers, said Scott Johnsen, chief executive of Chicago-based Proximity.
The program is complex, in part due to the unique requirements of each drugmaker participating in 340B, said Johnsen, who founded Proximity in 2023 after previously serving as vice president of product at Kalderos, a company that also helps pharmaceutical companies navigate 340B.
Proximity, which raised a seed financing led by LRVHealth, acts as an auditing system, ingesting data from electronic-health records, drug wholesalers and entities that sit in the middle, known as third-party administrators. Its technology identifies claims that have been incorrectly rejected, or incorrectly approved, Johnsen said.
Proximity and other startups are aiming to help hospitals and other healthcare customers automate various administrative tasks. Another such startup is Keragon, an AI automation platform that recently raised $7.5 million in seed financing.
And now on to the news...
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How a transport looks: A drone with a cargo attachment during an organ shipment simulation. PHOTO: SCALEA LABORATORY
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Drone deliveries. If you need a prescription filled in the coming years, don’t be surprised if it flies in and lands in your backyard, The Wall Street Journal reports.
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Hospitals and doctors are increasingly experimenting with the use of drones to deliver medications, lab tests and supplies to patients being treated at home. Some are testing whether drones can be used to deliver organs for transplant more quickly and cheaply. And in some cities, a 911 call today could set off a drone carrying a defibrillator, Narcan spray or tourniquet to the scene of an emergency ahead of the arrival of paramedics.
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The first attempts to use drones to deliver things to people started more than a decade ago. Such efforts, however, were limited in part by Federal Aviation Administration regulations that require drones to fly within the line of sight of the operator—unless the operator had an exemption.
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But the adoption of drones to deliver everything from pizza to penicillin is accelerating, thanks to evolving drone technology, growing public acceptance of drones and progress toward developing a set of rules for drone flights that would enable broader use.
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$8 Billion
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The proposed amount that Johnson & Johnson would pay to settle a mass tort lawsuit stemming from women who claim the company’s talc products contained asbestos and caused ovarian and other gynecological cancers.
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Johnson & Johnson Goes to Trial on Third Talc Bankruptcy Plan
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Healthcare conglomerate Johnson & Johnson on Tuesday kicked off a bankruptcy-court trial on its third attempt to resolve one of the largest-ever mass tort lawsuits through a chapter 11 case, WSJ Pro reports. Over the multiweek hearing, J&J will seek to overcome objections from several stakeholder groups to the proposed plan that offers roughly $10 billion over time—or $8 billion in present-day dollars—to tens of thousands of women who claimed the company’s talc products contained asbestos and caused ovarian and other gynecological cancers. J&J will also face challenges to the vote count for the settlement plan, which hinges on whether as a solvent company it can use chapter 11 to resolve
its talc-related liabilities. The company has said the proposed plan is in the best interests of talc-related plaintiffs and that its talc products, including Baby Powder and Shower to Shower, are safe and never contained asbestos.
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Funds
Altitude Lab, a biotech accelerator started by Recursion Pharmaceuticals in Salt Lake City, said it has launched a pre-seed venture fund to support early-stage biotechnology startups that have been affected by recent federal funding policy shifts. With Altitude Lab, Altitude Lab Fund intends to provide capital, lab space and mentorship to Small Business Innovation Research-reviewed companies, the firm said.
NaturalX Health Ventures said it has secured €100 million ($104 million) for a venture fund focused on the intersection of consumer and health in the European market. The fund will focus primarily on Series A investments while remaining flexible to participate in late seed and Series B rounds, according to the firm, which said it will target consumer-health startups across Europe, with selected investments across North America.
Cherryrock Capital, a firm led by Managing Partners Stacy Brown-Philpot and Saydeah Howard, closed its debut fund with $172 million to invest in Series A and Series B rounds of companies led by a range of diverse leaders, including Black and Latino founders. Brown-Philpot is a board member at HP and a former chief executive of TaskRabbit, while Howard is a former partner at True Ventures. Limited partners in Cherryrock’s fund include Goldman Sachs Asset Management, J.P. Morgan Asset Management, MassMutual, Top Tier Capital Partners, and Pivotal Ventures. Cherryrock backs companies in digital health, enterprise software-as-a-service, fintech, and other sectors.
People
Ventus Therapeutics, a clinical-stage biopharmaceutical company, said it has named Dr. Mona Kotecha as its chief medical officer. Kotecha joined Ventus from ExploR&D, a division of Eli Lilly’s Catalyze360, where she was chief medical officer. Ventus said it has two small-molecule programs entering Phase II clinical development for immunology, inflammation and neurology disorders.
Deals
Epitopea, a cancer immunotherapy company developing off-the-shelf, RNA-based treatments, said it has formed a licensing and research collaboration with Merck to identify Cryptigen tumor-specific antigens in an undisclosed solid tumor. Cryptigen tumor-specific antigens are shared, non-mutated, aberrantly expressed antigens derived from what were thought to be non-coding regions of the genome, Epitopea said. Under the agreement, Merck will have exclusive rights to develop and commercialize therapeutics derived from the collaboration. Epitopea will receive an undisclosed upfront payment and is eligible for milestone payments with potential to total for up to $300 million per product.
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Avandra, a federated network for medical imaging and clinical data, said it has raised more than $17.7 million to accelerate the use of imaging-centric data for research and patient care. Aegis Ventures, a venture studio that creates healthtech companies in collaboration with health systems, co-led the financing with SpringRock Ventures. The company said it would use the capital to develop its platform, expand its data network through partnerships with health systems and providers and scale its commercial initiatives with biopharma and medical researchers.
Subsense, a neurotechnology company developing a nonsurgical, nanoparticle-based brain-computer interface, said it has raised $17 million in seed financing led by Golden Falcon Capital. The financing will accelerate development of bidirectional nanoparticle-based technologies that connect the human brain with external sources, the company said.
Reverb Therapeutics, which seeks to harness the immune system and cytokine signaling to treat diseases such as cancer and autoimmune disorders, said it has raised $12 million in seed financing led by Amplitude Ventures. Reverb says its platform combines bispecific antibody engineering with data-driven modeling of antibody interactions to modulate the actions of endogenous cytokines and redirect them to tissues of interest.
Paperplane Therapeutics, a Canada-based company specializing in therapeutic virtual reality solutions for pain and anxiety management, raised a $1.5 million funding round led by Glen Ventures.
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A strain of bird flu recently spread from wild birds and poultry to cows, and a dairy worker subsequently tested positive for the strain. PHOTO: MICHAEL M. SANTIAGO/GETTY IMAGES
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