When Cathy Tie started Locke Bio, a Culver City-based digital health startup, she had spent years as a venture capitalist seeing a trend in the digital health space.
Direct-to-consumer telehealth platforms and pharmacies, such as Cerebral and Hims & Hers, were popping up. Amazon.com Inc. acquired online pharmacy platform PillPack for $1 billion and these companies began taking hold among a cluster of then-young Millennials navigating health care during Covid-19.
In mid-February, Locke Bio launched Locke Bio Pay, a payment processing platform that enables these direct-to-consumer brands to handle pharmaceutical payments within the strict compliance laws of the state or country. Locke Bio partners with LegitScript, an internet and payment compliance organization for the health care sector that verifies the medical professionals prescribing drugs are legitimate. Few banks are allowed to process the sales of online drug prescriptions, which involves using a specific code to label the transaction.
As these online pharmacies began to grow, Locke Bio came in. Billed as the Shopify for pharmacies, the company offered these online health startups a way to manage electronic medical records, set up telehealth appointments and deal with payments of highly regulated pharmaceuticals. Locke Bio’s clients include Longevity Meds, Riize and Mailbox Meds.
“Seeing those trends at the time made me realize that there’s a really big opportunity to create infrastructure in this space to be a platform, a one-stop shop, an end-to-end platform, that can help telehealth companies in the future to launch and scale very quickly and cost-effectively,” said Tie, the chief executive of Locke Bio. “At the time, if you were a direct-to-consumer brand, you had to build your own infrastructure from scratch every time. And that can be very costly and take a lot of time.”
These sorts of online pharmacies have become increasingly popular in recent years thanks to a boom of GLP-1 weight loss drugs pioneered by the likes of Ozempic and Wegovy. But online pharmacies are still a relatively new concept in the United States, and regulators have to weed out bad actors.
“I think probably one of the biggest things is that, in terms of penalties and the backlash for doing these sort of gray area transactions that are completely violating the code regulations, (penalties are) really going to come over the next couple of years, especially because there’s been so many companies that have been operating in this great gray area over the last couple of years with a boom of GLP-1s,” Tie said.
