I went to pharmacy to pick up prescription. It was $25 with my insurance. Had them check using Good RX and it was a lot cheaper. I pay my insurance company premiums and Good RX nothing so how can they be cheaper! I suspect the answer will include references to prescription benefits managers, which also doesn’t make sense. Seems like the pharmacy would buy medicine from the manufacturer or other supplier and then have a set price (like every other business) which my insurance may cover some of. How does this all work?
In: Economics
I had the same question and had looked it up. Does not directly answer your exact question, but I found it useful:
https://www.nerdwallet.com/article/health/how-does-goodrx-work
GoodRx works by buying some drugs in bulk.
Basically, instead of you and your insurance paying a retail rate for some limited amount of some drug. GoodRx says “hey we will give you 1 million dollars for 1 millions pills right now.
The manufacturers don’t make as much money per pill, but they do get a guaranteed million dollars all at once.
GoodRx is a pharma data and analytics company. They buy data, in the form of “How many people will use GoodRx to check the price for a discount of $X?” at a drugstore-by-drugstore level of precision. They buy this data by paying the pharmacy to sell you the pills for less than they bought them for.
If it was $25 with insurance then the pills probably cost the pharmacy $20. The pharmacy benefit manager (PBM), as your hinted, helps the insurance company and pharmacy make what they consider “reasonable” profits, regardless of the “retail price” of the drug.
When GoodRx says the pharmacy can sell the pills for $15, that’s because they are willing to pay $10 per prescription to know all about the transaction. They get all your insurance data and the details of the doctor who wrote the prescription.
They feed this data into some complex analytics and sell the results to drug companies. They have slices by insurance company and PBM so that drug companies know which companies are biasing customers away from their products by having high copay prices. GoodRx gets enough money from this analysis to pay all their workers and pay all the pharmacies.
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