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Startups selling sexual-wellness drugs and treatments for baldness have upended the way medicine is sold over the internet, but their customers are paying heavily marked-up prices.
Hims Inc. and Roman Health Medical LLC, two of the most popular of those startups, sell erection and hair-loss drugs. They’re following the pharmaceutical version of a common retail startup strategy: take a pedestrian product category—sheets and mattresses, furniture or, in this case, generic drugs—and attempt to turn it into internet riches with fashionable packaging, social media-driven marketing and plenty of venture capital.
At Roman, a 20-milligram dose of sildenafil, the generic ingredient in Viagra, costs $2. Hims charges $3 a pill. The pills are sold to pharmacies for about 15 cents, according to a government survey, and a patient can find them at some regular drugstores through online discount programs for as little as 41 cents a pill.
Some customers seem not to care. Dylan Nelson, a 28-year-old Newport Beach, California, salesman, is one. His thinning hair had long bothered him, but it was an ad for Hims that convinced him to try finasteride, the generic version of prescription Propecia.
Hims charges $28.50 for a monthly supply of finasteride, plus a $5 fee for an online physician visit. The drug can be had for half the price elsewhere.
“I know you can get it cheaper through other sources,” Nelson said, “But I’m willing to pay more for convenience.”
Shopping Around
Patients who like the sites’ ease may not realize they could have gotten better deals, said Michael Rea, founders of Rx Savings Solutions, which has an app that allows people to compare drug costs. Getting the best deal often depends on where people shop and which discount programs or coupons they use. In some cases, the new telemedicine websites may even be cheaper.
“The average consumer is not going around looking at six different websites and comparing costs,” said Rea. “They might never know they could have gotten it for five bucks.”
At Hims, Nelson’s monthly finasteride prescription works out to 95 cents per pill, plus the cost of an initial doctor’s consultation, but with coupons from online discount provider like GoodRx the pills can be bought for as less than half that, about 40 cents. Pharmacies can purchase the drug for a mere 12 cents a tablet.
Hims’s Chief Executive Officer Andrew Dudum said that price isn’t patients’ only concern.
“Aside from the convenience and costs saved by not having to travel to the doctor or pharmacy, you gain access to a personalized consultation with a physician,” Dudum said. The company sells its drugs on a cash basis, outside of insurance that will sometimes cover costs of a doctor or drug through the regular system.
Roman declined to comment.
“They might never knowthey could have gotten itfor five bucks.”
Pfizer Inc., which brought Viagra to market, and Merck & Co., which sold Propecia, spent years and millions of dollars convincing men they needed the drugs. In 2017, in the final months before generics hit the market, Viagra cost $61.54 per 100 milligram pill, while Propecia cost $2.51 per pill before it lost its patent in 2013. Once the drugs went generic, the companies’ marketing and branding efforts essentially stopped. The startups have stepped into the gap, rebuilding the brand—and the price.
“The genius isn’t the product; it’s how they’re offering it,” said Nelson, the hair patient, who deleted his own Instagram account after a photo of his regrown hair that Hims reposted on the company’s account resulted in a flood of messages.
The companies have also faced questions about some of their practices, in particular the promotion of prescription drugs for off-label uses. Hims advertises an antidepressant for premature ejaculation, and a blood pressure drug, propranolol, to stop stage fright. Neither use has been approved by the Food and Drug Administration.
There's also nothing to stop people from taking advantage of Hims’s and Roman’s low-cost doctor consultations, then moving their prescription elsewhere to be filled. Both Hims and Roman say they will send prescriptions to another pharmacy, raising the possibility that the startups will take the expense of gathering new customers, then lose their long-term business.
Drug Unicorn
Investors have shoveled money at the startups. After a new fundraising round in January, Hims was valued at about $1 billion, according to PitchBook. Last month Roman raised $85 million, valuing the company at $500 million, according to PitchBook.
Their success has also attracted competition. Blink Health, a drug-discount startup that pitches low prices on generic drugs, recently added a men’s health telemedicine offering that undercuts Hims and Roman, charging $6.95 for 10 sildenafil pills and $8.95 for a month’s supply of finasteride. There’s also Chickpea, which sells supplements to women with cystitis; Cove, for migraines; Kick Health for propranolol; and Keeps for hair loss.
The crowded field has made attracting new customers expensive. In four weeks in February of this year, Blink was paying an average of almost $680,000 per week for various marketing costs including paid search and Facebook to bring in about $520,000 in weekly realized gross revenue, on average, according to numbers viewed by Bloomberg News.
An outside spokesman for Blink didn’t respond to a request for comment from Bloomberg.
According to iSpot, Hims has launched 18 nationally aired TV ad campaigns and Roman has aired 11, in addition to aggressive targeted campaigns on social media platforms like Instagram. Hims has hired Partners & Spade, a branding firm that also counts J. Crew and Warby Parker as customers. A campaign for Roman by the firm Circus Maximus won an AdAge digital award.
They’ve also turned to the same older customers that the brand-name pharmaceutical companies once sought. While one recent Hims commercial featured rapper Snoop Dogg, both have recently advertised on cable news channels including Fox News’s primetime opinion shows with hosts Tucker Carlson and Laura Ingraham. Cable news audiences in general tend to skew older, and the Fox shows have a viewership consisting primarily of those over 50, according to the firm Nielsen, which tracks viewership.
While the companies have helped bring in new patients, their bigger challenge may be keeping them. Brandon Scarberry, 19, lives in North Carolina and commented on one of Hims’s Instagram posts: “5x20mg for $25 Ridiculous. Go to a doctor.”
