GoodRx – How It Works and When You Should Use It
GoodRx is a company that allows you to compare drug prices and find coupons at over 60,000 pharmacies across the country. Seems great right? But something you might not know – their coupons can’t be combined with insurance, which is how roughly 95% of prescription are paid for. Wait what? Doesn’t GoodRx promise to save customers money on thousands of medications? Well yes, and in some cases they certainly do – let’s take a look at how it works!
How Prescription Pricing Works?
Before diving in, it helps to provide a basic overview of how prescription pricing works. Prescription prices are set by your insurance company and pharmacy benefits managers (PBMs) in most cases. This price typically comes as a copay, which is usually a small portion of the drug’s actual cost. For example, a drug that has a $5 copay might actually cost $100. That is why we have health insurance – to cover the remaining $95. In this way, prescription pricing is very similar to pricing for a doctor visit or an x-ray. You don’t actually pay the total cost, you only pay the co-pay amount. And that co-pay is set by your insurance plan.
What is GoodRx?
GoodRx is a Santa Monica based company that was founded in 2012. Their website and app allow you to “compare prescription drug prices and find coupons at more than 60,000 pharmacies.” However, when they say compare prescription drug prices, they really mean CASH prices, or the price of a prescription if you aren’t using insurance. As we mentioned, very few prescriptions are paid for this way. More than 95% of prescription are paid for using insurance. This means the prices being shown are not necessarily reflective of what you would pay at that pharmacy.
How Does GoodRx Work?
Using the service is simple enough. If you plan on paying without insurance, just go to the GoodRx website and type in your medication. GoodRx then shows a list of cash prices and coupons at participating pharmacies near your location, which you can print or save on the GoodRx app. Then, similar to using a coupon at the grocery store, you just present the coupon at the pharmacy counter when you pick up your prescription.
How Does GoodRx Make Money?
According to their site, GoodRx makes money from advertisements on their site and referral fees. These referral fees are based on the number of GoodRx coupons that are used at a pharmacy. In recent years, the company has also began offering a premium membership program called GoodRx Gold. This includes a monthly membership fee of $5.99 for individuals and $9.99 for up to six family members. The plan promises to save customers even more money with over 1,000 medications for under $10 each.
Do Pharmacies Lose Money With GoodRx?
The sad reality is that many pharmacies lose money when they accept GoodRx. Prescription margins are already razor thin and the referral fee from GoodRx likely puts them in the red. So why do they do it? Well, for some pharmacies, the idea is that by accepting GoodRx a pharmacy will attract more customers to their business, which gives the pharmacy a chance to sell other non-prescription products and potentially earn future business from that customer And so, despite the pharmacy losing money on the individual prescription, the hope is that the additional business will make up for it. This is also why many independent, non-chain pharmacies won’t or hate to accept GoodRx. The majority of their revenue comes from prescription medications. Unlike a CVS or Walgreens, when an independent pharmacy loses money on an individual prescription, it is unlikely they will be able to offset the loss by selling convenience store products (i.e. greeting cards, snacks, etc.). This can really hurt smaller pharmacies who are unable to absorb these types of losses.
When Should You Use GoodRx?
While we’ve talked about how GoodRx is not appropriate in many cases, there are certainly circumstances where it can be beneficial. If you are uninsured or if you will be paying without insurance for a particular medication, then GoodRx might be helpful. In these cases, GoodRx can help you get a baseline for how much you might need to pay out of pocket, in addition to potentially helping you save money with a coupon. Just remember, the prices GoodRx lists on its website are not necessarily the best prices available since they only display and offer coupons for partners and paying advertisers. So use it more as a guide than an absolute truth.
Summing it All Up
GoodRx can be a great tool, especially if you are uninsured or will be paying without insurance for prescription medications. But it’s important to understand what GoodRx really is and when it is appropriate. If you need to pay for prescription medications without insurance, make sure to do your research and avoid paying too much at the counter! If you have any additional questions about the costs for pharmaceutical drugs, send us an email at email@example.com and we’ll do our best to answer them as quickly as possible.
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