Can someone explain how these free cards work to give a better price than the paid-for policy?e prescription drug plan my company offers. My doctor suggested I use the GoodRX card and the price was about one-eighth (!!) of the first quote.
Can someone explain how these free cards work to give a better price than the paid for policy?
NB: the drug plan through my company is actually highly rated, so it’s not a scam.
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Immediate update since I can’t edit!!
My company’s drug plan price was ~8x the price I got from GoodRX.
Sorry for teh typo
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Prescription drug pricing is extremely complicated. GoodRx will have a contract with some kind of pharmacy benefit company which sets the rates you’ll pay to purchase drugs via them, a bit as if they were acting like your insurance company. In this case it sounds like GoodRx (or one of its benefit companies) has negotiated a better rate for that drug than your own insurance company did. GoodRx will make money by charging a fee to the pharmacy and by collecting and selling data on health information.
In this area, health insurance is more like a discount club than “insurance”.
The pharmacy has to pay some amount of money we’ll call the “wholesale price” to get a drug. Obviously the pharmacy has to make money. So while we don’t know the “wholesale price”, we can assume it’s cheaper than the cheapest price you can buy the drug with any particular plan.
When you use insurance, the price of the drug is something that the pharmacy and the insurance company have negotiated. The pharmacy’s going to keep the profit. If you gathered 10 people together and looked at their full explanation of benefits, you’d probably find there are different “without insurance” prices for each medicine: that reflects that each company’s having to negotiate prices with the pharmacy. (This is probably also why sometimes my insurance suddenly decides a random drug “isn’t covered”, they’re upset at what the pharmacy asked for it.)
The same thing has happened with these cards. Those companies also negotiated with the pharmacy, and argued that some people who have bad insurance or no insurance simply won’t buy some medicines, so they can sell more medicine thus make more money if they agree to sell at a discount to people with this card. The company takes a small share of that price. The pharmacy gets to sell to some customers who wouldn’t have spent any money at all. Everyone but the patient wins.
This is also why if you have most health insurance, you can’t use these cards. I had a doctor give me one of these cards once, and every time I tried to use it every pharmacy I went to refused to take it “because I already have insurance”. They want the higher price they charged the insurance company. More than half the time the medicines I was getting cost more with insurance, or weren’t covered the same so I had much higher out of pocket costs.
Why don’t the insurance companies use this to fight for lower prices? It doesn’t really affect their bottom line. Most of their customers are healthy and don’t use enough prescription medicine to affect their bottom line. The small percentage of “customers” with chronic conditions can just be rejected or have to jump through other hoops to make it harder for them to get their expensive medicine, and the healthy majority doesn’t really care to fight to make that fair. If a pharmacy gets too greedy, an insurance provider reclassifies the drug as “not covered” and just lets the people who need it deal with higher prices or more paperwork.
You have to keep in mind the goal of health insurance in the US isn’t to provide affordable healthcare. It’s to provide the *most profitable* healthcare. That means some quality has to be sacrificed to ensure corporate growth. Think about it the same way as McDonald’s. Nobody agrees they have the *best* hamburgers, and some people don’t even think they have *good* hamburgers. But they make a lot of money so they’re successful.
The discount cards are sort of like a local burger joint: way more likely to provide better value for your dollar. Only also in this analogy you have to ask McDonald’s for permission to eat there before every meal.
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TLDR regular insurance is a scam to maximize profit but we still need to make money off poor people so this is the solution. Similar to how we sell goods in 3rd world countries at steep discounts because they wouldn’t sell otherwise (e.g. video games priced in local currencies for pennies on the dollar of US/EU prices).
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