The short answer is, yes, GoodRx does have a viable business model.
In today’s insurance world, more and more employer provided insurance policies are moving to high deductible/high co-pay plans. Why is this happening? Well, simply put, it’s cheaper for the employer.
But, employer offered insurance plans are just one of a few insurance options (for those employed) for people to pick. Another would be Get 2018 health coverage. Health Insurance Marketplace , better known as “Obamacare”, which tends to be very expensive depending on certain factors.
GoodRx, however, is positioned to capture individuals who are on employer provided plans, as well as people paying for their own via Obamacare, and 100% self-pay individuals. Below, I’ll address how GoodRx is relevant to each one of these options.
1.) Employer Provided Plans – Historically, people who were on an insurance plan provided by their employer would almost never think twice about using their insurance at the pharmacy. More times than not, these individuals would go to the Doctor, get their prescription, drop it at any pharmacy, pay a $5/$7/$10 co-pay and that would be that. Recently, however, many employers have started moving to high deductible/high co=pay plans to save money. While the employer saves money, it actually ends up costing the employee far more than one would expect, simply because of the high deductible. Someone that has a high deductible plan is basically uninsured until they hit their deductible, which could take months and months. Also, that flat/low co-pay they were used to paying has now started to fluctuate and go up in price. This is where GoodRx comes into the picture.
Assuming most people are taking generics, the GoodRx prices are often times in line with, or better than, low insurance co-pay prices. Why would someone who is on a high deductible or high co-pay plan pay full retail price when they could go to GoodRx (for free) and pay a price that is the same (or better) than the lowest co-pay plans? Even better, let’s say someone is taking a blood pressure medicine that they get filled every single month and they use GoodRx in January because their high deductible plan just started so they’re no where near hitting that deductible yet. Well, that price will then be on file for all of their remaining fills. They don’t need to do anything else. It’s a great way for GoodRx to keep customers using their service without requiring any effort from the customer.
2.) Obamacare – This one is very similar to the first option. Obamacare can be extremely expensive (hundreds of dollars a month), depending on the plan someone picks. One of the main factors in that monthly price is deductible. So, someone can save a TON of money by going high deductible and using GoodRx at the pharmacy instead of their plan. Essentially, this is an easy way to be “legally” insured (but not use the rx coverage) and save a bunch of money.
3.) Out of pocket – This one is simple, as people who are paying out of pocket are typically paying the full retail price at the pharmacy. And, as you can see by using GoodRx, those prices can vary widely depending on the pharmacy. While GoodRx can’t help these folks at the Doctor’s office, they can and do often get these people the same (or better) price at the pharmacy as a low co-pay insurance plan would. These people will typically use GoodRx every single time they go to the pharmacy, as their drugs would not be affordable otherwise.
How does GoodRx make money, you might ask? Well, in the most basic form, they get paid a “rev share” fee each time someone uses their coupon at the pharmacy. Why would a pharmacy work with GoodRx? Simple. GoodRx drives incremental customers to their pharmacy who otherwise would have gone elsewhere. GoodRx also has revenue streams from on-site advertising, a commercial product, and I’m sure a few others.
In closing, GoodRx has a very, very viable business model and I would expect them to eventually be acquired by someone else in the industry. They are providing a service that individuals depend on and probably would struggle to afford their prescriptions without GoodRx.