How a relatively unknown startup is shaking up the health tech world

Ruth Reader here, again!

Obviously, the news of the week is The New York Times profile of Medvi, a virtual care company that didn’t even exist three years ago and is projected to do $1.8 billion in sales this year, connecting patients with weight-loss drugs. 

The company is run by two people, founder Matthew Gallagher, and his brother Elliot, the company’s only employee. Instead of workers, Gallagher has made proficient use of artificial intelligence and partnerships. He used CareValidate, a platform that provides the infrastructure for a telehealth business, to spin up Medvi’s front-door and OpenLoop’s doctor and pharmacy network to prescribe GLP-1s and handle compliance.

It’s akin to drop-shipping for weight loss drugs. 

Medvi has taken no outside investment, and Gallagher says it only took two months and $20,000 to get this business started. 

The company is a stunning example of how artificial intelligence is making it easy to start a new healthcare company.  

A few notes: the drugs that Medvi is selling are compounded, not brand-name drugs. The Food and Drug Administration has recently cracked down on telehealth companies that prescribe compounded GLP-1s, including Medvi. In March, the agency sent Medvi, as well as 29 other telehealth companies, warning letters letting them know the agency believed they were misrepresenting the safety of their products and where they come from, in violation of unfair and deceptive practice laws. OpenLoop is also facing allegations that it’s violating both consumer protection rules and Racketeer Influenced and Corrupt Organizations laws.

In February, the Department of Health and Human Services General Counsel Mike Stuart referred telehealth company Hims to the Department of Justice to investigate whether the company is misrepresenting the compounded drugs it sells. Should the DOJ take up the case, it will signal that the government intends to take action against similar companies. 

It is against this backdrop that Hims settled a patent-infringement suit with weight loss drugmaker Novo Nordisk last month. Hims will now be selling Novo’s brand-name drugs: WeGovy and Ozempic. 

All this to say, Medvi is making a lot of money, but it’s unclear how durable it is to sell compounded weight-loss drugs, particularly through a Medvi-like structure. 

Rather, the takeaway from the Medvi article is that health tech innovators can really take advantage of the new AI era, as multi-time founder and managing director at consultancy Mannatt, Josh Tauber, and Keaton Bedell, founder of health insurance infrastructure platform Bridge, wisely noted on this week’s episode of Lifers. 

Medvi’s use of technology is impressive, notes Tauber, but there’s no moat around his business. “I’m not sure there is a moat around software anymore,” Tauber told Second Opinion. 

Bedell agreed, which he thinks is an opportunity for health care businesses that can use artificial intelligence wisely and focus their attention on creating differentiation around the care they give. AI may also give way to new financial models in health tech.

“You can bootstrap something like this for $50,000. That opens the door for many more companies to be built that don’t need to be venture-backed,” said Bedell, something he says may be healthier for the health care category at large.   

The 100% tariffs on brand-name drugs only apply to a lot of drugmakers

The Trump administration has announced that imported brand-name drugs will be subject to 100% tariffs. It’s a scary levy, but the carveouts are so significant that a large number of big pharmaceutical companies will be exceptions to the rule. The drugmakers that have struck a deal with the administration won’t have to pay, and the ones that pledge to bring production to the US will be able to cut the tariffs to 20%. Some biotech products are also exempt from tariffs.