Can Eli Lilly With LillyDirect Change the Delivery of Healthcare?

Trying to get rid of the middleman seems to be a universal business pastime.

Companies spend billions trying to “go direct” to gather first-party data, exert more control over the customer experience and cut out the middleman fees. Investors pour tens of billions into startups with tech to make it easier for brands to open their virtual storefronts, establish a social presence, find customers and make sales without using an intermediary. And regulators and lawmakers spend lots of hours working to break up the middlemen whose aim was to make it easier for buyers and sellers to find each other and do business at scale on a single platform.

Lots of middlemen are valuable, unavoidable — we’d miss them if they were gone. But that doesn’t mean companies shouldn’t look for the right opportunities to reduce their dependence.

That was what Eli Lilly decided to do. It launched LillyDirect.com on January 4th, 2024, to deliver an end-to-end healthcare experience for patients with one of three chronic disease states: diabetes, migraines, or obesity. Eli Lilly makes prescription medications to treat each of those medical conditions, including a new weight loss drug, Zepbound, which was approved by the FDA in November of 2023 and is an Ozempic competitor.

Eli Lilly’s approach provides insights into what it takes to really ignite a platform and deliver value to its stakeholders.

LillyDirect has positioned its portal as the middleman between patients with one of these three medical issues, Eli Lilly’s medications and the doctors needed to diagnose the patient and write the scripts.

Except they really can’t be. That’s probably a good thing.

Their approach provides insights into what it takes to really ignite a platform and deliver value to its stakeholders.

How LillyDirect Made History

LillyDirect’s debut made headlines as the first pharmaceutical manufacturer to sell its medications direct-to-consumer, even though the industry has been pitching ads directly to consumers since the late 1990s. It was then that the FDA relaxed its advertising restrictions, which until that time only permitted doctors to promote pharmaceutical products to their patients. In 2020, Statista reports that 75% of all TV ad spend came courtesy of the pharma industry; in 2022, the total pharmaceutical ad spend was $8.1 billion. That’s up from $550 million in 1996.

Those dollars have delivered a strong ROI for those companies. Some sources say that for every $1 in ad spend, pharmaceutical manufacturers have seen their sales increase by $4.20.  Whether that’s right or not, it is true that the ads lead to conversations between consumers and doctors to get necessary care, saving themselves and the healthcare industry millions and improving the patient’s quality of life.

The real impetus for the launch of LillyDirect seems to be their desire to catch a piece of the $150 billion weight-loss drug market fueled by the unprecedented success of Ozempic and Wegovy.

The cornerstone of the LillyDirect strategy is to use the portal to match patients suffering from one of the three chronic diseases they list with doctors in their area for either an in person or telehealth visit. Those doctors will offer an opinion on the patient’s condition and even one of Eli Lilly’s drugs for their condition if medication is required. The platform also allows patients with an existing script for an Eli Lilly medication to order directly from their digital pharmacy, cutting out the traditional retail pharmacist.

But the real impetus for the launch of LillyDirect seems to be their desire to catch a piece of the $150 billion weight-loss drug market fueled by the unprecedented success of Ozempic and Wegovy. These two Novo-Nordisk weight-loss blockbusters are said to account for 52% of Novo-Nordisk’s sales thru Q3 2023, $4.8 billion in Q3 alone.  And although Eli Lily and Novo-Nordisk both produce insulin drugs for the treatment of diabetes, Novo has twice as much market share in that category.

Eli Lily’s Zepbound is available to patients on the LillyDirect platform — provided they have a prescription from a doctor to get it. Visitors to the portal must complete an online weight-loss assessment before being directed to a list of doctors in their area who will make an independent assessment of their condition. Patients who are given a prescription for Zepbound can fill it and refill it there and have it shipped to their homes.

Therein lies the catch — and the friction. And friction, we know, is what platforms must eliminate, not create.

The Doctor in the Middle

Doctors are the most important healthcare middlemen — and the lynchpin for any disruptive healthcare play. Without a doctor there is no diagnosis. Without a diagnosis there is no course of action for a patient, and no prescription medication if needed. Without a prescription there is no opportunity to prescribe Eli Lilly’s or any other pharma manufacturer’s medication to the patient.

Regulations forbid pharma manufacturers from giving doctors incentives to prescribe their drugs — and that’s healthy, pardon the pun. It’s also a point that LillyDirect reinforces on their site. Doctors are trusted by their patients to be the independent caretakers of their physical and mental health and, as the Hippocratic Oath says, first, do no harm.  Second, don’t prescribe unnecessary medication. Third, don’t take payments from Big Pharma in exchange for writing scripts.

The LillyDirect portal offers links to partners and platforms that aggregate doctors for both virtual and in person consultations.

They’ve partnered with telehealth providers (Cove for migraines, for example) and Healthgrades, which is a yellow-pages directory of doctors founded in 1998 that filters providers near to where a patient lives. Site visitors are taken off the LillyDirect site to those platforms. There, would-be patients must still vet providers and get in touch to make appointments to be treated.

Connecting patients with doctors directly isn’t something that LillyDirect can do.

When I poked around the site, I discovered a dog’s breakfast list of providers, some 399 doctors near me when I did a hypothetical search for migraine specialists. I found many who didn’t seem relevant (e.g., ophthalmologists) and many who had no ratings, pictures or notes were taking new patients. I suppose these directories could be helpful for some, but it didn’t seem any better (in fact, a lot worse) than doing a Zocdoc search or using a telehealth platform, including those offered by employer plans, to find a doctor.

Finding a doctor isn’t the hard part, though. Getting an appointment is friction. Telehealth can solve some of those issues by providing more flexible options for seeing a healthcare practitioner, particularly for those consumers living in underserved communities or more rural parts of the country. For the medical conditions that LillyDirect addresses, it’s hard to see how making a conclusive diagnosis without seeing a patient and getting diagnostic tests is possible — or desirable.

Connecting patients with doctors directly isn’t something that LillyDirect can do. It also isn’t how the LillyDirect.com portal will make its money.

The Online Pharmacist is Ready to Refill

LillyDirect says that it can offer better pricing to patients with a prescription for one of their medications. That could be a big benefit — if, in fact, their pricing is more competitive than other online alternatives. It should be, particularly for the drugs that may not be covered by insurance like Zepbound, and where they say payments plans may be available to qualifying patients.

This makes LillyDirect.com more about disrupting the retail pharmacy channel for patients with existing scripts — which is a red ocean — than changing the nature of healthcare delivery.

Unless, of course, the LillyDirect strategy is about using the popularity of GLP-1 weight loss drugs to drive consumers to their site to fill a prescription given to them by a doctor who has prescribed it.

That assumes that consumers know Zepbound as a name brand, that their doctor feels comfortable prescribing it, that they are directed to LillyDirect somehow to get it filled and refilled, and Eli Lilly is the name brand pharma company behind it all.

You know what they say about assumptions.

What’s In a Name Brand?

Taylor Swift is a global brand even though most people don’t have a clue who produces her music. James Patterson is a best-selling author even though most people don’t know or care who publishes the books he writes. The Martin Scorsese film Killers of the Flower Moon raked in several Golden Globes awards a few weeks back even though most people can’t name the movie studio that released Scorsese’s latest masterpiece.

The answers, in case you’re curious, are Big Machine Records, Hachette and Paramount.

Pfizer and Moderna became household names during the pandemic as the manufacturers of the Covid Vaccines, even though most people would be hard-pressed to name the companies who make the flu shots that went into their arms this past flu season.

Patients may know name brands of the drugs they take regularly because they refill them at the pharmacy — Lipitor for high cholesterol, Eliquis for AFib — but have no idea who makes them. Even those who take Ozempic and Wegovy may not make the connection between the brand name of the drug and Novo Nordisk, the pharmaceutical company that manufactures them. Pharmaceutical companies have chosen not to throw their ad dollars at promoting their brand names, but at the names of the drugs they hope consumers will ask their doctors about.

LillyDirect is a cold-start platform that requires their key stakeholders — doctors and patients and insurers over which they have no control nor a direct relationship — to find value and get on board.

Eli Lilly wants to use LillyDirect to turn its brand into a household name — and more specifically wants to use Zepbound as the stalking horse to achieve that. The hope is that Zepbound is to Eli Lilly what Taylor Swift is to Big Machine Records  — the big hit that elevates their branded weight-loss product, and that of the company that manufacturers it, beyond the Pharmacy Benefit Managers, doctors and pharmacists who know it today.

That’s a big lift, even though the popularity of the weight-loss category is a tailwind.

Some consumer brands — Weight Watchers that bought Sequence and now offers Ozempic by subscription, online weight-loss sites like Ro and Noom that have added Ozempic and Wegovy to their offerings — have existing members as a starting point to sell into. LillyDirect is a cold-start platform that requires their key stakeholders — doctors and patients and insurers over which they have no control nor a direct relationship — to find value and get on board.

Maybe we will see a few Super Bowl ads.

What’s Next

Innovating how patients with chronic diseases and doctors find each other to improve the delivery of care is the essence of the connected healthcare ecosystem we see unfolding today. It is a tremendous opportunity for new players and incumbents to use connected devices, AI, technology and payments to disrupt market dynamics and reallocate profit pools.  It’s one of the five foundational principles of digital transformation that I’ve been writing about for the last several years.

But I wonder if Eli Lily is the right player to advance that opportunity. Or whether its best shot is as a platform that connects someone else’s with a critical mass of doctors or patients to overcome the platform and regulatory impediments that will make ignition a slog.

I wonder whether LillyDirect is one of those ideas that looks really great in a deck.

I suppose LillyDirect could become an ad supported, AI-driven, souped-up version of WebMD for specific disease states with the addition of content and advertising — but that sure seems like an expensive consolation prize based on the current hype and expectations. Maybe that’s the best they can do given the current regulatory environment, especially since there is also no guarantee that the doctors that patients find using their portal will prescribe their medications. Or that patients will want to manage their medications across different online channels.

But I also wonder whether LillyDirect is one of those ideas that looks really great in a deck. You can just see the slide showing how LillyDirect gets all the sides on board and is just like Visa or Amazon or some other successful platform. When the reality is that it can’t deliver enough value to its customers to get the virtuous circle going.