> 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.
Every 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.
You have to think like an American to understand it. See, American culture strongly incentivizes us to view other people as competitors. We like things that benefit us and don't mind that they hurt others, while at the same time we are wary to adopt things that potentially benefit others more than they benefit us.
People that have good healthcare thanks to their job (and those that merely think they do) often view healthcare reform as something that benefits their competitors more than it benefits them.
This mindset is also why we have a narrative against all forms of social welfare, because they take our money (at gunpoint, as some would say) and give it to our competitor.
It’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.
I'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.
It'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.
Certain folks are. Diabetics who can't afford insulin do, so the states are trying to get free insulin plans established. Senior citizens are to some extent as well. Otherwise healthy Americans who don't experience the long term pain of chronic conditions, until obviously it is too late and they need medical care.
Americans don't really understand price and value for money.
The ACA is really popular though so we just need to transition that to a medicaid/medicare buy in. I mean we already pay for that in our taxes anyway. A bigger issue is the medical lobby who likes the sweet sweet insurance money as does the insurance lobby who likes the sweet sweet insurance money of a relatively low risk pool (working Americans).
Long 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.
When 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.
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
They have to accept all legal tender which is cash.
When people have secondary insurance usually you have to bill the primary first and then the secondary picks up the rest.
In this case the thing to do is take the prescription to another pharmacy and use GoodRx there without giving them your insurance information. It sounds like this pharmacy acted in bad faith and that would be worth reporting to the pharmacy board.
GoodRx 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.
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. 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.
> 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.
I 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.
I 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.
My 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.
I 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.
why? 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
India like many countries uses [selective] price controls. If you cannot meet the stipulated price you cannot sell your drug at all.
Many countries can get away with it because manufacturers figure it's better to make a tiny profit than to be completely cut off from a market. And fighting it can be too much effort when you're dealing with small markets. American consumers in a lot of ways are subsidizing the rest of the world. One idea to fix it was to mandate that a drug company cannot sell to non-American consumers at a cheaper price.
When it doesn't work as well, drug availability is impacted and criminals make billions illegally exporting these drugs. And pharmaceutical corporations suffer, but that's not a problem for most countries.
Isn’t it true that you have to pay cash or not be admitted to hospitals in India (maybe private only. I am just going by stories my mom told me from PK). So they know you’re not even getting in the door if you can’t afford it which forces price transparency
usually depends on how big or unscrupulous the hospital is. The big ones charge you through the nose for every frigging thing, read inr 15K per night for a bed, charges for injection administration and visits by dietician. For the treatment you are told to pay up before the operation so you know generally how much you are getting into before hand.
The big problem which comes when a patient has to visit another city for treatment, you usually have to take a couple of relatives for assistance. Air/rail tickets, Hotel room/rented apartment, then food and transport for these people. That is usually more than the actual cost of procedure if the thing goes longer than a few days.
Yes. For a non emergency procedure it is common to shop around for either govt hospitals which is cheaper if not free but there is a delay in actual treatment or private which just quote you a figure. Then its just a matter of budget/ recommendations from friends.
Insurance is as i said, not prevalent so your savings count and sometimes people draw a credit but that is in exceptional cases.
yeah,its apparently called "golden card" thing, i'm not sure myself. it is looking like a in-patient cashless mediclaim policy for 500k INR per family or whatever.
> 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.
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
US 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".
shouldnt medicine be priced "without" the assumption that everyone will have insurance? insurance is a benefit given by consumer to themselves by paying for it, not the other way around?
Many medicines aren't commodities with lots of suppliers, so the seller has a lot of power in the pricing negotiations. Insurers aren't paying higher prices to "keep prices inflated", they're paying them because there is no other choice.
Sellers might also want to sell to insurers and others with deep pockets at a higher price than to non-insured or buyers with less money. So they will negotiate one price with an insurer, and the insurer will try stipulate they can't offer anyone a lower price, but then the seller might be able to get around this via rebates or discounts for buyers that can't afford insurance, etc.
my question is why is insurer there in this discussion? from my understanding, pricing should be negotiated between companies and buyers in the market.
> they're paying them because there is no other choice.
In a free market, alternatives come up because consumers dont want to pay for exorbitant prices, they just cant afford it.
Pricing can only be negotiated properly when a buyer and seller are sufficiently educated about the market and the products.
Very few people are sufficiently knowledgeable about medicine and healthcare to be able to discern an appropriate price (much less determine if what they are buying is even necessary or not).
Hence society relies on #1) trust by assuming healthcare providers are acting on good faith and #2) a knowledgeable actor providing a second opinion such as a government healthcare payer like the NHS in the UK or private insurance companies in the USA, who employ teams of doctors and pharmacists to review people’s cases and determine appropriate levels care.
For example, if you have a plumbing problem, you can call 5 plumbers and get educated and make an informed decision. With a healthcare emergency, lack of time and lack of healthcare providers and other resources makes that an untenable solution.
I'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.
It’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.
I 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.
Pharmacies 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.
In the US system I think it’s more appropriate to say the PBMs own the product and the producers are just providing a cheap raw material. After rebates the producers take only 1/3 of the sale, and they have all the costs. The PBMs take 2/3 and are in charge of driving price negotiations, which they are just absolutely terrible at, as can be seen by the prices that just keep rising and rising... I wonder why.
And yes you might think it’s the pharmacy getting the short end of the stick, but you’ll see cases where insurance, Pharmacy benefits manager and the pharmacy are all owned by the same group anyway. So really it’s just the consumers. But it’s hard to notice since this all unfolds into higher insurance premiums, co-pays etc, which get compared to list prices, which keep rising, but are disconnected from then producers net take-home.
I don't differentiate between PBMs and insurers. All the big insurers own their own PBMs, and I don't see how it's any different from any other part of the insurance company that negotiates pricing such as for healthcare procedures. So the important players are the owners of the drug, who have the power to decide what they want to sell at, the insurers (and governments), who try to negotiate what to pay for the drug, and the premium payers, who decide which insurer gets to negotiate on their behalf.
Everyone else is just middlemen that I don't see wielding much power. All the PBM and rebate nonsense is just price obfuscation, but I don't see it changing anything even if it was all removed. It would just be rebranded some other way, as the goal is price discrimination, and to get richer entities (or those lacking in time/money to negotiate or hire someone to negotiate aka pay insurance premiums) to pay for more medicine since they can afford to pay.
By pharmacy getting crushed, I mean the retail operations. I imagine independent pharmacies won't be around longer, or if they are, they'll be making whatever scraps the insurance companies offer to throw them. There's lots of independent pharmacy owners who complain about not even knowing if the medicine they are selling is earning them money or losing them money due to the ability for insurance companies (and governments) to take back money for various reasons after the sale.
This is all part of the squeezing of margins due to automation and pharmacy retail services becoming a low margin commodity. Or forced to become a low margin commodity.
CVS went vertical with their insurance company/in person retail business, but I'm not sure if that will be as profitable in the long run as they hope. I've never seen in person retail work out well for profit margins on a large scale, except for Apple stores.
Here is an oversimplified, but still accurate enough explanation of how this works that explains how the pharmacies can be overall losing money on GoodRx, while being unable to lower their normal cash prices.
The PBM represents many insurance plans, but is independent of the insurance companies and is basically a hired entity to negotiate prices with pharmacies on behalf of the insurance plans. The PBM says to a pharmacy: we will give you access to the pool of end customers from the plans we represent as long as you are willing to sell at these listed prices, and with these terms and conditions. The pharmacy wants access to the customers, so they will usually agree.
The prices vary, and a few of them may actually be lower than the pharmacies costs, but many are well above, so overall the deal is usually OK for the pharmacy.
But be aware of a few of the terms and conditions. There are three important terms. The first important term is that if your cash price is less than the normal cash price, you must sell for that. So obviously the pharmacy will always want to sets is cash price higher than they think any PBM will offer. And possibly even higher than that if any PBMs have a term like you will sell to our plans for our price or 80% of your cash price.
The second important term is that the PBM gets a kickback on many transactions as sort of a "finders fee" (and is one of the ways the PBM makes money). These kickbacks and the like are also a mechanism for the PBM to allow negotiating with individual pharmacy chains while providing uniform pricing to the insurance plans. Remember each pharmacy chain has its own negotiated wholesale costs for the medications, so they can negotiate larger PBM kickbacks on some of those they have lower than normal costs, in order to get smaller kickbacks on products where they have higher than normal costs, etc.
The third important term is a term that these prices must be available to the PBM's partners.
Now we have GoodRX. GoodRX partners with many different PBMs, and basically lets its members get the cheapest price from any of them. The PBMs give GoodRX a cut of their kickback. The PBMs agree because they would rather get part of a kickback for non-members through GoodRX, than get none of a normal cash sale to the pharmacy.
The problem is that each of the PBMs have some really good deals (possibly money losing for the pharmacy) on different medications, and GoodRX can basically just use whichever deal of its partners is best. Thus GoodRX effective overall deal with the pharmacies is too good, and pharmacies only accept it because they agreed to partner price sharing with the PBM.
Thanks! Still confused, but just a little less. Seems like the opaque maze linking PBM's, insurance consumers and discount platform like GoodRX keep the real cost for each drug hidden from one or the other, so one doesn't really know how much they are making, and pharmacies are too afraid to lose the PBM network to challenge status quo. Not sure why government allowed this process to last this long, and not just step in, and regulate pricing for each drug.
The 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.
Adam 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.
This 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.
The 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.
It'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.
My 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....
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.