Discover more from The Takeoff
Zack Gray (Co-Founder & CEO, Ophelia)
A chat about substance use disorder (SUD), prescribing controlled substances, and building companies
If you are interested in reading more interviews, just like this one, with founders, operators, and investors from today’s leading companies/startups, feel free to subscribe below!
Interview Guest: Zack Gray
Role: CEO at Ophelia
Previous: He’s a Y Combinator-backed entrepreneur, Columbia University-funded research scholar, and a Wharton MBA graduation speaker. Previously, Zack led customer acquisition for a residential solar startup, which he helped grow to $30M in revenue. He studied astrophysics and philosophy at Columbia University and received his MBA from The Wharton School.
Quick Note: This interview was recorded in September 2021. Please excuse any parts that feel outdated.
In 2021, there were an estimated 107,622 drug overdose deaths according to the CDC which is the highest on record, 30% higher than in 2019. Innovators are trying to combat this by distributing test strips to see if a product has been contaminated with fentanyl, opening overdose prevention centers where users can safely inject, and prescribing drugs to combat addictions and overdoses.
The drugs involved in Medication-Assisted Treatment (MAT) market: Suboxone, Naltrexone, Buprenorphine, and Methadone.
Why it’s difficult for clinicians to prescribe these drugs…
In order to prescribe many of these drugs, clinicians need an X-Waiver. Only 5% of clinicians have an X-Waiver as it is difficult to obtain.
Ophelia is also partnering with nursing schools to make this process easier.
Lastly, a quote: “I would say, don't just run with an idea because you want to start a company. Listen to the market, and as long as you're seeing positive signals at each step, keep going, and eventually, you'll be further along than you may have thought.”
Lukas: I would love to start with your background and steps leading towards Ophelia.
Zack: I went to Columbia undergrad. I studied astrophysics and philosophy. I was fairly uninterested in business. I sort of knew business as a world in which the only real objective is to make money. And I wasn't all that driven by money. I saw lots of my smart friends going to work on Wall Street. It kind of felt like they were wasting their talent. Meanwhile, my father had just passed away from cancer and it was clear to me that there were more important problems to work on than trading stocks.
So I spent my undergrad career kind of intellectually exploring, getting comfortable with the big questions of life, working in physics labs for a couple of years and then, you know, increasingly became excited about startups as a way to make the world better. The core insight is not novel, but simply if you can figure out how to do good with people's money and also pay them a return, well, you can raise a lot more money and do a lot more good because the amount of private capital available is far greater than the amount of charitable capital in the world. So I went and joined a solar energy startup based in New York as employee number two.
I became the head of growth and then decided that startups were going to be my thing. But I had no real training in business. I've never looked at a financial statement, knew nothing about accounting, corporate finance, barely any accounting. So I decided to go to Wharton and get my MBA. And as I was getting ready to graduate, a girl that I had a very long, sort of on and off complicated relationship with but loved very much died of an overdose. And I immediately saw this as a problem that I wanted to work on but was skeptical that I'd be able to do much about it because I didn't have a background in healthcare.
But then I started talking to physicians and people in recovery and business healthcare services professionals and essentially discovered that the problems here are not medical or scientific in nature. They're the kinds of problems that a startup can solve and they predominantly relate to access. So we have treatments that work extremely well. They reduce overdoses by 75%. They look like the treatment you get for depression or anxiety.
It's very similar to what people seeking treatment actually want, very little like what we traditionally think of as rehab. And due to these tremendous barriers, 80% of Americans struggling with opioid addiction are not getting any form of treatment at all. And the default solution from any of them is to buy the exact same medication on the black market from the same person who sells them drugs for literally thousands of dollars a month.
Meanwhile, this treatment is covered by insurance. So how are these things possible? It relates to regulatory barriers, behavioral barriers, economic incentives, just the sort of thing that a startup can help solve. The entire mission of the company is to take this treatment called medication assistant treatment, make it more accessible, and in doing so, make it easier for patients to choose clinicians over drug dealers.
Lukas: What is medication-assisted treatment (MAT)?
Zack: Medication-assisted treatment is a term that applies to other substance use disorders as well, including alcohol addiction.
The three medications that are FDA approved to treat opioid use disorder are methadone, Suboxone, and naltrexone. Suboxone is the most commonly used. And the way that it works is it binds your opioid receptors to give you enough relief to relieve withdrawal and cravings, but not get you high, and also binds your receptors with a greater strength than other opioids. So if you decide to do some heroin, it won't affect you because your receptors are occupied by the Suboxone.
Lukas: Do patients get addicted to Suboxone? And if they do, is there a downside to that?
Zack: Addiction is the wrong word. Addiction implies a physical dependence that creates harm to your life. People take antidepressants for many years without any negative side effects. People take insulin for diabetes for many years without any negative side effects.
They're dependent on that medication, but it's not addictive because it restores normality, happiness, and health. And that's how we think about Suboxone. So if you're addicted to opioids, first of all, why is it an addiction? Because most people don't want to be addicted to opioids. It can kill you. You don't have a legal supply, so you're constantly running around looking for your next dose. You're spending tons of money. It ruins your family and your career and all sorts of things. That's an addiction. And if you want to stop using, you're going to go through a very intense withdrawal period that most people can't survive.
So 90% of people who try to stop using opioids without the help of medication are using again within three months. And so we know that at least early on, suboxone is critically important. How long you stay on the medication beyond that point differs by person. The research says the longer you stay on it, the more likely you are to not relapse. But certainly there are people that, for whatever reason, don't want to stay on the medication and they choose to taper off, and we'll help them with that. But the reality is a significant percentage of them will be back in relapse and come back at Ophelia in the future.
Lukas: Physician licensure required to prescribe these drugs is quite difficult to obtain. Is there any history behind that legal industry that makes it that way?
Zack: I think that it's easy to focus on the patient barriers but ultimately many of the patient barriers stem from supply side barriers which are caused by bogus regulation. So in order for any physician, any nurse practitioner, any physician assistant with a prescription pad and DEA license in America could prescribe you Oxycontin, Percocet or Pain Killer. In order to prescribe suboxone, you need a separate license from the DEA called an X Waiver.
Only 5% of clinicians in America have that waiver. 40% of counties in America don't have a single license prescriber. Once you have your license, you're capped at the number of patients you can treat, which in the first year is only 30.
And so if you go get a license to prescribe suboxone, but you can only treat 30 patients, but you're not really eligible for full-time hire at an addiction treatment program, so you probably go work somewhere else and not use your license at all. And so there is a huge shortage of eligible, qualified, trained prescribers and that directly leads to access barriers for patients. Now, our philosophy is that we need to utilize underutilized prescribers by creating a platform that allows them to work part time with the support they need to treat high risk chronic patients.
And that includes software, care, team, support for their panel while they're off the clock. And also we need to increase the number of wavered prescribers. And so part two of our strategy is partnering with nursing schools. We've got them certified as an X Waiver training program to increase the number of eligible prescribers and give them an avenue to practice if they want to for as little as 8 hours a week, even if it's not their full time job.
Lukas: What kind of effort goes into getting in that waiver? How hard is it, actually?
Zack: Well, for a nurse practitioner physician system, which is the majority of our clinician population, it's 24 hours of certification training and then an application process, and then you get the ability to treat 30 patients. And if you've done that for a year, then you can apply to increase your cap to 100. And then under special circumstances, you can increase it. You can apply to increase it to two several times. So yes, it's kind of annoying, but I don't think that the actual X Waiver licensure process is the barrier.
It's all of the other barriers, which is it's hard to treat this patient population. There aren't good platforms for them to use, and it's an additional step. So by default, you can't do it. You have to be motivated to do it in order to get either waiver in the first place. Yeah, it's not too hard of a problem to solve.
Well, one of the major problems in addiction treatment, as it's an addiction treatment education, is that more often than not, clinicians do not get hands on patient facing experience. So even if you go through your national X Waiver training program. You do your 24 hours online.
You don't actually talk to a patient. So a lot of people leave their X Waiver training feeling like they're not ready to treat patients who are at very high risk of serious illness and overdose and death. And so we want to be the training site for these schools so we can show clinicians what it's like to actually treat patients, make them feel comfortable, teach them best practices and give them a path to join the workforce if they're interested.
Now, our medical directors are physician researchers and clinicians at Columbia University who have worked with SAMHSA, the Substance Abuse Mental Health Services Association, for 20 years to design this protocol. So they know how to train. And they're a huge asset in helping to recruit and educate and oversee new clinicians who haven't done this before.
Lukas: What's one piece of advice you would have told yourself when you were first starting Ophelia as a founder?
Zack: I think the closest Ophelia ever was to failure was before I started business. You know, I had opportunities to I was graduating business school, I had opportunities to go work elsewhere. And had I woke up one day, got a great job offer, I might have taken it and never started on this journey. And I remember a close friend of mine from Wharton who went to work in healthcare investing in Venrock, went in for his final interview, and he saw a bunch of successful founders present.
And he came back to me and said, Zack, the only difference between you and these people is that they've managed to put 1 foot in front of the other for longer. So that night I went and sat down, wrote up a one page business plan, and from that point on was convinced that this thing needed to exist. And so I think starting very early, the advice to myself is have confidence that others aren't necessarily special. They're just willing to take risks and have the determination to see it through. And that's true even if you don't have expertise per se in your particular domain, because often the expertise you need is adjacent to that domain, which is why what you're creating doesn't exist at all, because there are no experts. And so I would say, don't just run with an idea because you want to start a company. Listen to the market, but as long as you're seeing positive signal at each step, keep going, and eventually you'll be further along than you may have thought.
Lukas: And last question I like to ask all my guests, what's something that you as a founder take care of your own mental health?
Zack: Yeah, I think the most important thing to do is to create boundaries and turn off at certain points. Chronic stress is a result of constantly being on. I'm more than happy not working on some weekends. I just took travel solo through to Colombia on vacation. I wasn't really checking slack, wasn't checking the numbers, because I was more than happy to take my mind off of the business, focus on myself, other things, with the realization that it would be good for me, it would also be good for the business, because I would come back recharge and with a refreshed perspective.
So there are plenty of things that you can do that founders on Twitter will tell you, like meditate and exercise, drink yerba matte or whatever. But ultimately, the most important thing is just make sure that you leave room in your life for other things. Because too much of one thing for too long will burn you out. And that's good for nothing.