When I first saw an advertisement for GoodRx, I assumed it would be a fad for 6 months and then I would never hear about it again. It has been over a year and I still watch their bad Monte Hall commercial before every fifth YouTube video.
Before I describe GoodRx and pass judgement on it, I should describe a little of the prescription market. Major pharmaceutical companies manufacture drugs and determine a list price that will allow them to hit a target profit margin. Much like for clothing or vehicles, the MSRP is not the amount that an average person will pay; the cost to consumer depends on many downstream factors. The pharmaceutical company will sell to a wholesaler, who, in turn, sells to a pharmacy. Pharmacies have relationships with third-party payer and their wholesalers that cause price variance of the same drug between pharmacies. At each level, a little profit is taken. On the demand side of the market, consumers often have two options:
- purchase the prescription in cash without insurance.
- purchase the prescription using insurance.
Insurers don’t determine which drugs will be covered under their plans, nor do they determine the price of the drug for their members. Insurers contract that work to a Pharmacy Benefit Manager (PBM). Pharmacy Benefit Managers determine which drugs will be covered by a plan and what a member will owe for the drug, the PBM does not need to disclose the real price of the drug. Insurers pay the PBM a fee for administering the drug plan, and the PBM keeps any rebate or discount that they receive from the pharmaceutical manufacturer. I could write at length on PBMs, but for the purpose of this article, I’ll only note that the position of PBMs are controversial. Some claim that PBMs save consumers money, others note that PBM profits continue to grow at an alarming rate.
GoodRx, and other prescription discount cards, can be thought of as a self-serve Pharmacy Benefit Manager for the uninsured. GoodRx identifies the lowest cost location for a drug in the consumer’s area and negotiates rebates and discounts with pharmaceutical companies for further discounts.
Does that mean that my initial skepticism about GoodRx was unwarranted? Mostly yes. The business model is sound and prescription discount cards are legitimate. However, GoodRx is not a panacea and I have two primary concerns about its use:
- GoodRx may not be trustworthy when handling patient data.–Although the company claims to have reformed its advertising policy, Consumer Reports reported that GoodRx was sharing user data with tech firms and advertisers.
- GoodRx may lead the insured to make unwise financial decisions.
The second point deserves some clarification. In 2018, over 43% of Americans were enrolled in a high-deductible health plan. In these plans, a member will generally pay for 100% of their care (either out of pocket or using an HSA/FSA) up to a predetermined dollar amount or deductible. The health insurance industry has a lot of nuance that I can’t begin to cover in this format, but understanding the concept of a deductible is the piece relevant to GoodRx. Deductibles can include or exempt pharmacy costs based on the member’s plan design.
GoodRx cannot be combined with insurance. For many on high-deductible health plans, GoodRx can appear to offer lower cost drugs than even the copay offered by the pharmacy benefit manager. These apparent savings are not as they appear. Over a year, because insurance will often pay for the drug once a deductible is met, members in the scenario described above will often be better off using their insurance and paying a little more early in the year. GoodRx does not make that evident.
GoodRx is a good option for those who are uninsured, or know their current insurance offering and can account for anticipated yearly cost of their drugs. It is not likely a good solution for all. Especially those who would save a little in the short-term and, as a result, spend more over a year by forgoing their insurance.
Polly Wanna Math 