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Akalenedat t1_je58hyl wrote

Same way AARP gets discounts for its members, Insurance companies pay less than self-pay, and Unions get better wages: collective bargaining.

Say GoodRx wants to offer a discount on aspirin. They go to Bayer and say "hey, we represent a million customers. If we can promise that 500,000 of them will buy Bayer aspirin instead of store brand generic, will you give us a discount?" Bayer thinks for a minute and replies "our analytics team has found that only 33% of consumers will spend more for our brand vs generic. If you can guarantee 20% increase, we'll give you 15% off." (Or whatever the real numbers are, I made those percentages up for demonstration purposes.)

GoodRx is essentially selling customer loyalty to pharmaceutical companies. Guaranteed, albeit reduced, returns vs the uncertainty of typical marketing.

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apple_cheese t1_je5ftuy wrote

So close to universal health care "hey drug company, we want you to provide an entire countries worth of people with drug X give us a discount or we'll go to the competition"

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police-ical t1_je63poi wrote

Basically, yes. All prices are ultimately set by mutual negotiation. The problem with being an ordinary person in the current US drug market is that the pharmacy has already negotiated with insurance companies and signed contracts on the price of each medicine. To negotiate effectively and keep the lights on, the pharmacy must constantly press for higher rates, because the insurer will always press for lower rates. This constant arms race means the sticker price can be hugely inflated, while the insurance price is much lower. Both prices have very little to do with the wholesale cost of medication, which can mostly be made very cheaply.

Part of honoring that contract is charging that inflated price to anyone without insurance, because if they charged you $4 instead of $100 the insurer could sue for breach of contract, and refuse to pay more than $4. The pharmacy would actually love to still sell you medication at any profitable rate, but legally can't. GoodRx simply steps in to act like an insurer to negotiate rates, allowing the pharmacy to offer a discount that still makes some money. GoodRx still won't make branded drugs very cheap because the maker has a monopoly and there's no competition.

Conversely, a place like Cost Plus Drugs has its own suppliers for medication and doesn't work with insurance, so it can always charge a price that more directly reflects drug cost+labor+shipping+profit.

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prescriptionwater t1_je89jf7 wrote

You explained this very well though I will point out, the pharmacy actually takes a loss on a very large portion, if not a majority, of good rx claims.

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Pescodar189 t1_je7nf4q wrote

Great explanation, but I wanted to add to:

>which can mostly be made very cheaply

Making established medicines is indeed very cheap in general compared to their costs, but researching new medicines and getting them approved is wildly expensive, speculative, and on long timelines. If one truly wants to hold drug companies accountable to the cost of manufacturing a medicine they need some way to separate the costs and benefits of research from the manufacturing.

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police-ical t1_je7qv0e wrote

This is accurate, and gets into the somewhat more straightforward question of why branded drugs are expensive. Those seemingly ridiculous prices do indeed reflect a lot of very costly R&D, including for the host of medications that failed Phase II and III trials.

Generic medications, on the other hand, really should be expected to correlate somewhat with wholesale prices once there's competition. This does hold true for the (much healthier and more functional) over-the-counter drug market.

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Guvante t1_je8eeoh wrote

Certainly they can't charge $5 at the pharmacy for something that costs $5 to manufacturer.

But we can agree that charging $500 is a little suspect.

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tripdad333 t1_je9fbr9 wrote

The second pill only costs a dollar to make, the first one cost 1 billion...

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rxFMS t1_je6hr9c wrote

as a pharmacist who does not take GoodRX i can say that the prices goodrx advertises that pharmacies charge were NOT mutually negotiated by the pharmacy and GRX.

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police-ical t1_je7276s wrote

To clarify, that's true, individual pharmacies don't generally negotiate this and wouldn't really have the negotiating power to begin with. The actual process is harder to understand, let alone ELI5, but involves a twisted mess of negotiations among manufacturers, large pharmacy chains, insurers, and a bizarre and increasingly unethical middle-man company called a pharmacy benefit manager.

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rxFMS t1_je72vnh wrote

Thanks for clarifying. (PBMs are the worst!). What always gets me is that a customer will come in and have to what appears to be a quoted price from my pharmacy thru good rx. And it’s usually at my cost or below.

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tibsie t1_je6uew5 wrote

Not just that... "If you want to sell your drug in our country you'll have to negotiate a decent price with us otherwise you can forget doing business here."

I'm so glad that I live in a country that gives me free prescriptions.

I find it very hard to get my head around the idea that a doctor has said that someone has a medical need for a drug, but they still need to find hundreds to pay for it out of pocket.

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taisui t1_je6wla5 wrote

but governement wants money = tax = bad, even when the math works out to be cheaper.

Bernie rages.

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ronerychiver t1_jeap0sm wrote

“WEEE WOOO WEEE WOOOO! SOUND THE SOCIALISM SIREN!!! WE GOT A COMMIE OVER HERE!!” -GOP probably

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