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The business model is simply to collect referral fees from Pharmacies and PBMs. Also to sell data back to insurers and pharmaceutical companies. There are comp

The business model is simply to collect referral fees from Pharmacies and PBMs. Also to sell data back to insurers and pharmaceutical companies. There are companies known as PBMs (Pharmacy Benefits Manager) whose sole purpose is to negotiate rebates and group discounts on behalf of insurers and employers. GoodRx operates as PBM at scale or more exactly as an aggregator of deals from PBMs + Pharmacies. The pharmacies pay them because they drive volume and the PBMs pay them because they help to lower the cost of their medication programs which is one of the reasons they exist. It's the same model of a coupon website.

lotsofpulp 6y ago
>There are companies known as PBMs (Pharmacy Benefits Manager) whose sole purpose is to negotiate rebates and group discounts on behalf of insurers and employers. All the big insurers have their own PBMs now so I'm not bullish on their business model lasting. Insurance companies hold the trump cards as they are the ones collecting the premiums and have the money. There's no reason for any of the big companies to give up margin to GoodRx. Maybe some of the smaller health plans might have to make deals with them.
- maxerickson 6y ago
  GoodRx is taking up the same role as a PBM. If you use them, insurance is not involved in the transaction.
  - refurb 6y ago
    Insurance is involved with a PBM, just not directly. Insurers are the end payer. They just hire the PBM to manage their pharmacy coverage and spend.
    - lotsofpulp 6y ago
      At least the 5 biggest insurers operate their own PBM, so I don’t see the distinction between PBM and insurer to be useful.
    - maxerickson 6y ago
      In second sentence, them=GoodRX.
- whoisjuan 6y ago
  Yeah. But insurance companies are more profitable when they don’t cover the medications of their customers. They have PBMs because they don’t want get charged more than they should. Insurance companies would love everyone going through GoodRx because then they don’t have to pay for those medications. There’s really no margins in paying for medications. This is always a red number for the insurance.
  - s1artibartfast 6y ago
    > But insurance companies are more profitable when they don’t cover the medications of their customers This isn’t accurate. Insurance companies have legal fixed profit margins as a percent of spending, so they want this to be as high as possible. This creates a vested interest in both maintaining high prices and spending.
    - lotsofpulp 6y ago
      In an area with multiple health insurance companies, they can’t just keep spending more and keep raising premiums otherwise a competing insurer will take their business with lower premiums.

lotsofpulp 6y ago

>There are companies known as PBMs (Pharmacy Benefits Manager) whose sole purpose is to negotiate rebates and group discounts on behalf of insurers and employers. All the big insurers have their own PBMs now so I'm not bullish on their business model lasting. Insurance companies hold the trump cards as they are the ones collecting the premiums and have the money. There's no reason for any of the big companies to give up margin to GoodRx. Maybe some of the smaller health plans might have to make deals with them.

maxerickson 6y ago
GoodRx is taking up the same role as a PBM. If you use them, insurance is not involved in the transaction.
- refurb 6y ago
  Insurance is involved with a PBM, just not directly. Insurers are the end payer. They just hire the PBM to manage their pharmacy coverage and spend.
  - lotsofpulp 6y ago
    At least the 5 biggest insurers operate their own PBM, so I don’t see the distinction between PBM and insurer to be useful.
  - maxerickson 6y ago
    In second sentence, them=GoodRX.
whoisjuan 6y ago
Yeah. But insurance companies are more profitable when they don’t cover the medications of their customers. They have PBMs because they don’t want get charged more than they should. Insurance companies would love everyone going through GoodRx because then they don’t have to pay for those medications. There’s really no margins in paying for medications. This is always a red number for the insurance.
- s1artibartfast 6y ago
  > But insurance companies are more profitable when they don’t cover the medications of their customers This isn’t accurate. Insurance companies have legal fixed profit margins as a percent of spending, so they want this to be as high as possible. This creates a vested interest in both maintaining high prices and spending.
  - lotsofpulp 6y ago
    In an area with multiple health insurance companies, they can’t just keep spending more and keep raising premiums otherwise a competing insurer will take their business with lower premiums.