AdhereTech, a seven-year-old digital health startup focused on smart pill bottles and medication adherence, has raised a round of growth equity funding, its first since 2014. The company didn’t disclose the amount of the investment, which came from New York-based Argentum.

The company has deals with six top 30 pharma companies and all the major specialty pharmas, CEO Josh Stein told MobiHealthNews. It works with payers, pharmacies, and pharma companies to create adherence programs for patients built around the company’s cellular-connected pill bottle and a growing data collection and analysis architecture.

“Our customers use us for commercially-available specialty medications,” Stein said. “They sponsor programs whereby patients can get their meds from the pharmacy in one of our bottles for no additional cost. So if you’re a patient it’s completely free, this entire program.”

When patients use the bottle, it sends them reminders when they miss doses.

“The real value is twofold,” Stein continued. “Number one, simple reminders for missed doses. Text messages, phone calls, etc. And the value number two, we have all this data analysis in the back end and we’ll analyze a patient’s adherence patterns and basically if it seems like the patient needs additional care, the system sends the patient a message — please tell us why you missed this dose. And the patient’s response is analyzed by our software system. If it seems like the patient could benefit from additional care from the pharmacy, the pharmacy then gets an automated alert generated through our system, so they can then call to help.”

Analyzing data from real commercial deployments, AdhereTech has found that the platform generates an average of one to two additional prescription fills per patient per year. They improve duration on therapy by 26 percent, fill rates by 9 percent, and dose-level adherence by 15 percent for specialty medications, as well as posting high patient satisfaction scores.

Why it matters

Stein says the company didn’t need the funding, but saw an opportunity to accelerate its expansion. As such, the money will be used to expand its sales and partnerships team as well as to hire additional software engineers.

“We’ve really seen the value software engineers can bring when you’re collecting all this data that literally has never been collected before in human history,” he said. “We know different types of adherence patterns that might be indicative of a patient having a certain issue, or might be indicative of a patient going off the medication soon. We know which side effects cause patients to go off early in treatment vs late in treatment. We know if a patient misses a dose because of refill issues vs health issues vs hospitalizations. … Over the past year we’ve built out our data teams to build some insights, but we’ve seen such substantial value there that we want to make our data team a software team and really evolve the product in a significant way.”

What’s the trend

For the early years of the smart pill bottle trend, entrants like Vitality’s GlowCap tended to approach them as direct-to-consumer products aimed at patients and caregivers. But now most successful entrants in the space are pursuing an enterprise strategy, as Adheretech has from the beginning.

While the conversation around digital health and pharma has in many ways moved away from adherence, it continues to be a roughly $285 billion a year problem in which even modest improvements can lead to huge cost savings.

Most of AdhereTech’s business comes from specialty pharma, but the company also has clients that use the system for clinical trials and for adherence research.

On the record

“AdhereTech is one of the few companies that is successfully addressing the enormous problem of medication nonadherence, estimated by some analysts to result in over $300 billion in annual avoidable costs,” Dan Raynor, managing partner of Argentum, who will join AdhereTech's board, said in a statement. “Not only is AdhereTech achieving industry-leading returns for its pharmaceutical clients, but it is also providing them with important data about usage patterns that were previously unobtainable. We have been impressed with what Josh Stein and his talented team have been able to achieve in such a capital efficient manner, and we now look forward to supporting them as they continue to scale the business.”