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How GoodRx Profits from Our Broken Pharmacy Pricing System (2020)
- sn_master 6y agoDoes Amazon Pharmacy do the same? (https://pharmacy.amazon.com/ https://pharmacy.amazon.com/)
- Judgmentality 6y ago> But we’ve seen that Amazon can’t or won’t commit to changing the pharmacy channel. The article says no.
- marc__1 6y agoI think their CEO is answering this question just like Stewart Butterfield had to answer why Slack and MS Teams are not really competitors Some articles and interviews for "rabbit holers" [1] https://www.barrons.com/amp/articles/why-goodrx-ceo-isnt-worried-about-amazon-pharmacy-51606302000 https://www.barrons.com/amp/articles/why-goodrx-ceo-isnt-wor... [2]https://investors.goodrx.com/events/event-details/jp-morgan-healthcare-conference https://investors.goodrx.com/events/event-details/jp-morgan-...
- bmarquez 6y ago> That’s why a consumer without insurance saves money by having access to a PBM’s network rate, which is lower than the cash price. GoodRx provides a convenient and user-friendly interface for finding these PBM rates. Essentially, GoodRx is a PBM-backed program that passes a portion of rebates and network discounts off list directly to patients at the point of sale. Having had to deal with this hassle in the past, I'm glad GoodRx exists. I don't know of any other industry that charges a higher cash price than medical insurance price. Note: Costco pharmacy is slightly more competitive if you want your prescription mailed to you. Like GoodRx, you can compare pricing on Costco's website.
- fuzxi 6y agoLast time I had to get a prescription, paying cash with a GoodRX coupon was 25% cheaper than my out of pocket cost with insurance would have been. The mind boggles.
- russh 6y agoWhen my wife was without insurance we used GoodRX to drop the cost of her Propranolol to just under half of the cash price. Once she was eligible for insurance it was still cheaper to use GoodRX but the pharmacy refused and said she had to use her insurance or pay cash.
- tomrod 6y agoHow can the pharmacy refuse method of payment?
- lotsofpulp 6y agoGoodRx is not a method of payment. The pharmacy might decide it’s not worth doing business with goodRx for whatever reason, such as insufficient reimbursement or delayed payment. And any business can refuse methods of payment, except cash in certain states and cities.
- kristopolous 6y agoIANAL but from what I've read anyone can refuse any kind of payment prior to the transaction happening, such as $100 bills or being cash only. (https://www.federalreserve.gov/faqs/currency_12772.htm https://www.federalreserve.gov/faqs/currency_12772.htm) I believe it's wide open, you could say only accept gold bars and feral chickens for instance.(https://money.stackexchange.com/questions/77001/can-i-accept-gold https://money.stackexchange.com/questions/77001/can-i-accept...) The argument is that me buying a sandwich for $10 could also be validly viewed as the sandwich shop buying a $10 bill from me with the currency of a sandwich. Thus the method of payment is as subject to variation as the product being exchanged. The robust utility of cash and why this isn't usually done is that I can have two $10 banknotes, one crisp and well preserved and the other ragged, dogeared and blemished but for the sake of the transaction they are both worth exactly $10 without any negotiation. That's a fairly unique property of money, it doesn't lose value with wear and tear or defects. Anyways, when it comes to accepted payments, vendors are given a lot of liberties
- deleted 6y ago[deleted]
- refurb 6y agoAdam Fein is well known in the industry and his blog is a great source of info on how drug distribution works in the US. A real rabbit hole if you want.
- johnzim 6y agoExtremely high barrier to entry + (necessary) complex regulatory structure = industry with fewer players. And in that situation, you've basically got breeding grounds for cartels and price-fixing. Even if not all the players hold the line, prices will take a long time to come down rather than how quickly they would in a high-competition market. Heck look at how long it took carriers to stop charging insane money for SMS! It did eventually happen, but over the course of years as each carrier in turn put through small incremental price reductions to show growth for shareholders.
- mschuster91 6y ago> Extremely high barrier to entry + (necessary) complex regulatory structure = industry with fewer players. > And in that situation, you've basically got breeding grounds for cartels and price-fixing. In Germany, we have the same situation (high barrier to entry - pharmacists need to study almost as much as doctors - and an insanely complex regulatory and billing scheme)... but we don't have issues that are relevant for the patients like the US has, because we have what the US lacks: a framework that has other people (=insurances + the government negotiating with pharma companies + government setting rates for medical services, the "GoÄ" ruleset) deal with the bullshit. A person under government-mandated insurance (88% of Germans) won't ever see a bill for prescribed treatments (although there are tiny co-pays for medicine like 5-10€ per pack, and 10€ a day for hospital stays limited to 280€ a year). People financially disadvantaged (= receiving government aid, Hartz IV) are limited to 42€ a year in total medical co-pay, everything above that is waived.
- johnzim 6y agoI agree, but I'd note that as you've pointed out, Germany essentially has systems in place to mitigate the default behavior that arises out of the 'few players' problem. Almost all countries do. The US has plenty of healthcare regulations but none that successfully tackle cost. Nowhere near enough work is done to force price transparency, and it's not just that this data is known but not displayed (like a Pharmacy's formulary) but rather that it's often _not known at all_ because there's so much money sloshing around, people just stick their finger into the wind and pencil in their best guess. I think the German model is actually the easiest for the US to achieve and one with the best outcome - a public option under the ACA would be a great start. A *default* public option under the same scheme would be pretty much all we'd need to have the same framework to build from. I think I read that 75% of Germans choose the non-government option and the rest stick with it. That seems like a very healthy balance.
- Scoundreller 6y ago> its adjusted net income—earnings before interest, taxes, depreciation, and amortization (EBITDA)—is an astonishing 40%. Canadian telecom has better margins. Our government still thinks it's competitive (?) > The media division had a 20 per cent profit margin in the fourth quarter, while the wireless division had a 45.1 per cent margin. Lately they've been chopping away their media divisions for not being profitable enough... https://www.wellandtribune.ca/ts/business/2021/02/13/the-faceoff-bce-and-rogers-each-have-significant-media-holdings-but-are-focusing-on-their-more-lucrative-wireless-divisions.html https://www.wellandtribune.ca/ts/business/2021/02/13/the-fac...
- gitastrophie 6y agohoneybeehealth.com circumvents insurance completely. I can't always find my prescription on there, but when I do it's a steal.
- 2Gkashmiri 6y agowhy? i don't understand why medicine in US is not priced just like commodities, milk and bread? In india you have 2 major types of medicine. 1. proprietary combinations which are sold by companies at a market rate "printed maximum retail price" which includes kickbacks to doctors, medical representative salaries and all profits. Other companies also make the combinations so its not like sky high rates with one company, market adjusts itself. The rates are expensive but people have to live with it. 2. Generic medicine. the govt markets generic medicine of around 700 combinations which are priced at usually 10% the proprietary prices because there are no kickbacks to doctors, no reps and stuff. Same is sold by private companies also who find generic medicine profitable. The thing is, in india, medical insurance is still not prevalent. The companies cannot inflate the prices 1000% next month and expect everyone to continue buying the product. In the US, medical insurance companies finance these pharma companies to keep highly inflated prices and its all fine for the consumer only if they are insurance buyers. For others, tough luck
- lotsofpulp 6y ago> why? i don't understand why medicine in US is not priced just like commodities Because the drug manufacturers are trying to make everyone pay as much as they can afford, which means they need to create various methods of procuring the drug with various hurdles/trade offs so the final price is obfuscated. The rich / less price conscious end up paying more. > In the US, medical insurance companies finance these pharma companies to keep highly inflated prices This is not true in any way. Insurance companies regularly deny payment for brand name medications and usually only pay for cheaper generics.
- airstrike 6y ago> This is not true in any way. It is somewhat true in one important way: someone is paying for all that Big Pharma R&D, and it ain't developing nations or Western Europe's public healthcare system
- lotsofpulp 6y agoUS insurance companies might be paying higher prices for medicines, but they're not doing it for the purpose of keeping the prices of medicines "inflated".
- dannylandau 6y agoI've read quite a bit about how the PBM model works and GoodRX, and still can't figure out how the system works and why? From other sources, it appears that pharmacies actually lose money when accepting GoodRX discounts, and yet are unable or unwilling to lower their prices. Very bizarre!
- lotsofpulp 6y agoIt’s price discrimination. All the sellers, starting with the makers of the drug, are trying to ensure they can extract the maximum amount a seller is able to pay. So you have to create all these rebates and introduce caveats to make the price obfuscated.
- jb775 6y agoI noticed some heated conversations about pharmacies losing money in the comments section on the story page itself and thought the same thing. They can't get away with directly price gouging the consumer, so they transfer the price gouge to different parts of the supply chain so the pharmacy can eventually complain they're losing money. If anyone was actually losing money at the end of the day they wouldn't be involved.
- lotsofpulp 6y agoPharmacies are losing money, they have the least power in all these negotiations. It’s go big or go home, and it’s medicine manufacturer vs insurer vs retailer (pharmacy). Insurers hold the money, and manufacturer holds the product so pharmacy is getting screwed right now. It’s why you see so many grocery stores and Target offloading their pharmacy operations, and others closing down. They have no control over how much they will be reimbursed for the medicine they dispense, so basically it’s going to be CVS/Walgreens/Walmart/Costco left standing, but CVS saw the writing on the wall and merged with an insurer since going vertical is the only long term solution.
- boublepop 6y ago
- jijji 6y agoThe real crazy story is how anyone can buy any CAS numbered compound from a lab for usually thousands of times less per mg than at a pharmacy. An example is Azithromycin, which typically costs about $15/pill at 500mg, yet if you buy it direct from a lab that syntethizes the compound themselves at 99% purity, it costs around $0.04 for the same pill.
- 1996 6y agoWait until people learn about fish meds! When in a hurry go to PetCo!
- mhdhn 6y agoUh what?
- zbrozek 6y agoHumans aren't the only creatures who might be given medicines.
- gen3 6y agoMy freshman Bio professor said the same thing. He went through and listed a bunch of drugs/antibiotics, when to take them, and their pet (mainly fish) counterpart. This was all done with the intention of helping us poor college students. I think I still have those notes somewhere....
- zhouyisu 6y agoIt's very tricky to dilute them. DIY can easily lead to over-dosage. In powder form, it's hard to make e.g. 10mg dosage, the error margin can exceed 100% by hand or some cheap weigh, and powder will form small concentrated chunks.
- refurb 6y agoQuality control. Research chemicals don’t have much.
- secabeen 6y agoThe challenge I had was getting the pharmacy to actually correctly code the transaction to GoodRxs PBM. Especially when you have multiple prescriptions and different PBMs for each one, they often get screwed up, and charge the wrong one.
- schoolornot 6y agoI have excellent coverage but I've given up and for the last year been buying my topicals from India. This country really needs to re-evaluate which drugs really need to be gated by a prescription and which are essentially harmless. I loved visiting pharmacies when I was abroad. A few bucks for a few pills and that was that. Once my doctor here started telling me I could only get certain drugs from certain "specialty pharmacies" I had enough. The system isn't broke. It's engineered to screw everyone.
- refurb 6y agoSpecialty pharmacies deal with injectables and drugs for cancer. It’s not some conspiracy they are called “specialty pharmacies”.
- dbjacobs 6y agoLong ago, before goodrx and when my family did not have any drug coverage I learned the magic incantation "Is that the best price you can find?". I was always amazed that they would then spend a few minutes on their computers and find a price 50% to 80% cheaper than the original price they quoted me.
- gmac 6y agoEvery time I read anything about US healthcare I find it incredible that everyone there isn’t demonstrating in the streets every day to get it changed. This is a thread is from 2019, when I accidentally discovered how much Americans might pay for a worming tablet: https://twitter.com/jawj/status/1199026735980990465 https://twitter.com/jawj/status/1199026735980990465
- jsmith99 6y agoIt's astonishing that Americans have to pay for insurance at all, given that federal government healthcare spending per capita alone is at least as much as the NHS costs per capita, and the NHS is only average by international standards.
- refurb 6y agoIt’s because a lot of people are financially insulated from a lot of these costs due to good coverage. You hear about the horror stories but for a lot of Americans (not all) they have sense as to the cost of a drug beyond the $25 or $50 co-pay each month.
- Amezarak 6y agoI'm not sure how true this is. About 40% [1] of Americans have high-deductible health plans, which means they're spending at least $1400 (usually much more) before insurance kicks in a dime. Then about another 15% are uninsured. 17% have Medicare, but prescription drug coverage on Medicare is...complicated, and people are exposed to drug pricing. [1] https://www.covermymeds.com/main/insights/articles/2018-real-time-benefit-check-national-adoption-scorecard-key-findings/#citation https://www.covermymeds.com/main/insights/articles/2018-real...
- refurb 6y agoMy deductible for my high deductible plan doesn’t apply to prescriptions. That’s a separate plan and I have co-pays and co-insurance. Medicaid is almost zero out of pocket. Medicare is low cost as long as you don’t hit the donut hole.
- kangaroozach 6y agoI used to work with one of the CEOs, Doug. He was the first “adult” at Facebook and apparently helped create Facebook Photos. Quite impressive. Also after being heavily diluted at GoodRX, he and the other CEO managed to get new stock grants worth $500M at IPO. Wow.
- boublepop 6y agoThis is written like they are disrupting the model, but in reality GoodRx is just another pharmacy in the old model. Operating exactly the same way of taking kickbacks from PBMs who in turn raid the drug producers while driving price hikes most often eating up well above 50% of those price hikes themselves. Seems the only difference is “it’s a tech company” which changes their valuation and ability to raise capital, but they still don’t seem to actually be disrupting anything, just another cog in the broken machine. Or am I missing something?
- kgin 6y agoIt reminds me of “sudo make me a sandwich” The idea that I tell a pharmacist an arbitrary number I found on the internet and the price of the medication suddenly drops 80%… Good on GoodRX for making this process less obfuscated, but wow the market is broken if that is how it works.
- TheJoeMan 6y agoI'm also worried GoodRx is now incentivized to keep the market broken.
- bradj 6y agoMy wife is a pharmacist and she has a love-hate relationship with GoodRX. She deals with lots of people who don’t have good insurance or can’t afford their prescriptions and she is glad GoodRX offers benefits to these people but it is also a pain in the ass to administer. Pharmacies can’t just “look up” the price of a drug and switch between insurance, cash and GoodRX. It requires re-running basically the entire transaction and slows down their process, which considering how over worked they are is a bit of an annoyance.