How does GoodRx make money?

TLDR; (if you don’t want to read it all)

GoodRx is a marketing company that has partnered with a Pharmacy Benefit Manager (PBM) or several PBM’s to generate traffic (sales). The PBM’s negotiate discounts with pharmacies and earn a transaction fee in exchange for sending the pharmacy customers. The marketer earns a transaction fee for helping the PBM.

Currently, GoodRx does not sell your data but they reserve the right to sell it unless you opt out. The PMB is unknown. Its privacy policy is unknown so it’s not clear what terms they abide by. I assume they operate in the same manner as all major PBM’s which would make them no different than your companies insurance provider.

Should you be worried about using GoodRx? Basically no. And if you had to choose any cash network card, GoodRx is more transparent than the alternatives.

 

The full description:

GoodRx is a website that provides coupons for prescription medicine. You go to the website, enter your location (The USA only) and the drug and they search all of the pharmacies in your area for the cheapest price.

Recently I had to have a prescription filled that cost $200. With my deductible I have to pay $150, the insurance company covers $50. Given the price, I decided to use GoodRx despite my concerns about privacy. With GoodRx the same prescription cost me $75 total and all I had to do was show the pharmacist my telephone with the coupon info. I was happy, but when things seem to good to be true, they usually are.

How does GoodRX do it? My fear was that they were somehow selling my information to a health data broker. So I spent an hour or two researching how the company makes money. Here is what I found and what I have extrapolated from public data. Take into consideration that I know nothing more than what I’ve learned from Google searches about the prescription drug business. And there is a chance that I’m completely wrong in my assumptions.

GoodRx is vague on their website about how they make money.

We do not sell your personal health information to anyone. We make money from advertisements on our site and referral fees.

We can assure you that our prices are accurate and the discounts we find are based on contractual agreements.

This is all I had to go on. But it was enough. I started my research based on the words “referral fees” and “contractual agreements.”

This is what I learned about the drug business.

Your prescription insurance card has information on it based on the Uniform Prescription Card format. This contains three things:

  • RxBin: This tells the pharmacy who to bill. This is relevant if you have a co-pay. You only pay the pharmacy $20 and they have to electronically invoice the insurance company for the rest. Your insurance company doesn’t actually handle this process. This is usually outsourced to a Pharmacy Benefit Manager (PBM). So this number belongs to the PBM.
  • RxGroup: This is for the PBM, this could be your employer’s identifier or whatever group the insurance company has put you in. Grouping is generally used to negotiate rates. So it could also be an industry association or union. In this case, it’s likely GoodRx.
  • Rx ID: Your individual number.

GoodRx uses several RxBin numbers. And the RxGroup numbers never change when they are shown with their corresponding RxGroup. So this makes be believe they have partnered with several PBM’s. If so, this would make them a marketing company that has multiple partners, aggregates the data and displays the PBM with the best deals. They are providing traffic to the PBM.

PBM’s negotiate huge discounts in exchange for business sent to drug stores. If the PBM is large, for example, the PBM’s that represent a large union, AAA or several large companies, they can represent significant business for retail locations.

There are several marketing companies that acquire customers for the PBM, many of them are unscrupulous, for example using tactics that make old people think they are a government insurance agency.

So the discounts GoodRx is showing you is the discount that the PBM has negotiated with that individual pharmacy network (Walgreens, CVS, etc.) on behalf of their customers (RxGroup’s). The PBM makes money by charging the pharmacy a pre-negotiated “transaction fee” which is baked into the prescription cost. To incentivize marketing partners, the PBM gives them a cut of the transaction fee.

With an understanding of how these cards are backed and the revenue model, no one should ever pay for a prescription drug discount card.

GoodRx can also make money from coupons offered by the drug maker. A drug maker might offer a coupon to get customers to try a new brand of drug or variation of it. The revenue model for manufacturer coupons works in the same manner. A free drug coupon could mean the drug maker is paying all of the fees to the pharmacy, PBM, and marketer (assuming this is legal). Or they could be paying the marketer an “advertising” fee equivalent to the transaction fees.

<rant>Why would a pharmacy accept these discount cards? Because they rip you off and can make a profit while reducing a $200 drug to $50? No idea.

Big box retailers consider pharmacies traffic generators. You come for a prescription and end up buying something additional. That’s why pharmacies are always placed at the back of the store. They are OK with losing a little but this is killing smaller pharmacies</rant>.

Another way these marketers make money is by selling your data. When you sign up with the marketer you provide them with personal information. Additionally, when you have a prescription filled that information is sent to the PBM and the marketer as well. If you buy a cholesterol drug, the marketer could resell your data to a manufacture of cholesterol drugs as a lead. Or to a data broker who does the same.

GoodRx has stated many times publicly that they do not resell data:

We /definitely/ don’t sell personal information. That’s just wrong. We’re not out to make money that way and it’d go against our core beliefs and values as people, let alone what we’ve built as a company. We’re a very very small team just doing what we can to fix the messed up situation of prescription medication with no transparency.
Honestly. And if it’s of any assurance, we’ve never worked with IMS (data broker).  Source: reddit

One would hope the founder of a VC-backed startup isn’t lying on public forums. So I’m going to trust his statement. However, this doesn’t mean the PBM isn’t reselling your data (assuming this is legal).

I just checked GoodRx’s privacy policy and its confirmed many of my assumptions:

Information Received From Pharmacy Benefit Managers.
Most prescriptions purchased in the Unites States, including prescriptions filled through the use of discount coupons, loyalty cards or insurance co-pays, result in the pharmacy reporting patient data back to the company that provides the benefit. When you use a coupon provided by GoodRx, we sometimes receive personally identifying information about you and other transaction information from the corresponding Pharmacy Benefit Manager. This information may include prescription information such as your name, date of birth, your location, the name of your physician and when and where you filled the prescription.

If they are storing transaction data, there is a security risk. Should they be comprised, leaking of medical information would bankrupt them and cause a lot of damage to the people who used their service.

And while the founders state publicly that they are not selling personal data their privacy policy seems to be setting them up to be able to do so in the future. At scale, GoodRx will try to benefit from this data by performing analytics on transaction history and demographics and selling the analytical data in some format to companies. Their privacy policy seems to confirm that.

When we share demographic information with third parties, we will give them aggregate information only.
As we develop our business, we may buy or sell assets, and, depending upon the transaction, your personally identifiable information may be one of the transferred assets. In the event that we are acquired by another company, your personal information may be part of the assets transferred to the acquiring party.

They state clearly that selling your personal information is likely. The first sentence sounds like a “trade sale” for example if the company is acquired, or it’s a sneaky way for the lawyers to make it look like selling your data is related to an acquisition by following it with “In the event that” but those are two separate sentences. I read it to mean: They may sell your data (period) If we are acquired, we may ALSO sell your data to the company who buys us (period).

Scary right? But here is the good part:

HOW LONG DO WE RETAIN THE PERSONAL INFORMATION WE COLLECT FROM YOU?

We will retain the information we collect from you in our system indefinitely. If you would like information deleted, you may request deletion by emailing us at [email protected]

So you could perform a transaction, then email them to remove the record. Or perhaps email them every few months.

So again, I believe the business model for GoodRx is a marketing company that has partnered with a PBM or several PBM’s to generate traffic. The PBM’s negotiate deals with pharmacies and earn a transaction fee in exchange for sending the pharmacy customers. The marketer earns a transaction fee for helping the PBM.

Currently, GoodRx does not sell your data but they reserve the right to sell it unless you opt out. The PBM is unknown. Its privacy policy is unknown so it is not clear what terms they abide by. If they operate in the same manner as all major PBM’s, they are no different than your company insurance provider.

I don’t think there is any cause to be concerned about GoodRx violating your privacy at this time. There are a lot of similar companies online and off, but many lack transparency. So GoodRx is the safest choice if you had to choose any. If you do plan to purchase before you go to the store set a calendar reminder for 3 months in the future to remind you to opt out from their DB.

  37 comments for “How does GoodRx make money?

  1. ron
    June 15, 2014 at 5:00 pm

    pretty cool research and summary

  2. JEANNIE
    June 12, 2015 at 2:02 am

    Thank you for concise, easily understood synopsis.

  3. Belle
    July 3, 2015 at 12:21 pm

    Thank you for sharing all of your research! This is best write-up that I have found on what GoodRx is and how it operates.

  4. Mindy
    August 27, 2015 at 2:26 am

    Actually no one knows how much money the pharmacies are losing. The goodrx coupons are trying to lower the drug cost. But goodrx actually doesn’t understand the business of pharmacies. The drug prices with coupons are much lower than the acquisition cost of the drugs for pharmacies. Not sure how those coupons can exist. They are totally disasters for pharmacy business.

    • K
      January 24, 2016 at 7:51 pm

      This is ENTIRELY TRUE! Good rx charges the PHARMACIES when we use their cards!!

    • Mike
      April 28, 2016 at 5:03 pm

      The big chain stores with pharmacies that participate in GoodRx are basically speculating in long term profits. More customers buying other things they need or want.

  5. joe
    October 2, 2015 at 1:45 am

    GoodRx is nothing but glorified version of Rx discount cards found at gas stations, car washes etc. They make money by selling your information to marketers and any interested party. They make upward of $6 per prescription just by selling the information. They also charge pharmacies $2 to $4 on the back end.
    Their claim of making money from advertisers are false since I can’t even see one on their site. They make money by selling your info to advertisers !!

    Buyer beware

  6. October 13, 2015 at 11:14 pm

    I take Lortab daily for a bad back and took your coupon to the Walmart on N. Amidon to be filled. I had written your quoted price on the coupon.($21.00) and the pharmacist accepted it and proceeded to fill it while I did some shopping. I returned to pick up the medicine and was charged $37.00 for it. I was not happy to say the least. I was told after the Rx was filled that your prices are only estimates and the pharmacy does not have to fill at that price. Someone, you or Walmart has cost me $16.00.

  7. Chari
    November 12, 2015 at 1:26 pm

    Good Rx charges a fee to the pharmacy, plus they reduce the price to below cost so the pharmacies take a loss.

  8. Peter
    January 29, 2016 at 4:43 pm

    In the early days of PBMs, the drug companies wanted to keep control of them, including ownership. How successful have they been? As I read some of the pages, Good Rx seems to sing the song that brand names are better.

  9. levinel
    January 30, 2016 at 4:13 am

    l just made two GoodRx purchases at Safeway. Before the sale was completed, the clerk informed me that they would NOT ACCEPT the coupons if the resulting price was BELOW COST. (If so, she said she would offer me Safeway discount prices instead of the normal cash prices.) But she accepted the GoodRx prices – meaning they were NOT LOSING MONEY on the deal. For comparison, the GoodRx coupon price at CVS is 3.6x higher. Go figure.

  10. Rebecca Coelius
    February 8, 2016 at 8:38 pm

    I’m confused by something – how exactly does one “PBM shop” through discount cards? I thought a PBM was determined by one’s insurance plan and does not change?

    Are these discount cards negotiated by individual PBMs? If so, perhaps a different way of explaining this is that you aren’t so much PBM shopping, as gaining access to all of the coupons negotiated with all of the PBMs? Then that PBM makes money for sending a new client to the pharmacy?

    Last question- how are GoodRX PBM-negotiated coupons different from traditional manufacturer coupons? Many comments here are about pharmacies losing money on GoodRX coupons, but I thought in all cases the pharmacy was reimbursed for the coupon discount by somebody, usually the manufacturer or pharmaceutical company. Just like it works at the grocery store when you use a coupon for bread or toothpaste. The whole point of these coupons is to get patients to keep taking drugs that would typically be too much out of pocket/more expensive than alternatives, especially generics. It doesn’t make any sense that a PBM or GoodRX could just create a price they think patients should pay and turn it into a coupon without any associated reimbursement.

  11. Jason Carter
    February 27, 2016 at 10:00 am

    Do you know how many dollars of your $75 prescription went to GoodRx and not to the pharmacy? I’ll tell you… at least $50 of that $75 you paid. I guarantee you. I’ve actually seen $100 high-cost generic prescriptions where GoodRx and other “discount cards” keep 80% or more of the charge and the pharmacy either breaks even or loses money.

    • August 12, 2016 at 10:02 pm

      Pharmacies pay their fees only through the PBM they use, and the PBM sends out the payments to the discount card company. Those payments are only for the small fee generated by the use of one of their discount cards. However, millions of the cards, promoted by many discount card companies, are used each month.
      The discount card company receives absolutely nothing except the small fee generated by the use of their discount card at a pharmacy.
      Every pharmacy which honors the discount cards has signed a contractual agreement to do so.

      Would you please post the source link which stated that a discount card company would receive other monies? Thanks.

  12. JB
    March 3, 2016 at 12:41 am

    I just filled a RX at CVS and saved $144 by showing them the GoodRX card on my phone. No hassle no questions just a lower price. If it saves me $140 a month on 1 RX, they can have my information! The games pharmacies and insurance companies play are a complete rip-off and i like the idea of me being the one to saving $1,728 a year for change.

    $364 Cost CVS says they charge my insurance company or me until I meet my deductible
    $264 Cash price CVS said they would charge me
    $120 Price I paid with the GoodRX card on my phone and they said I get that every time now.

    • August 12, 2016 at 10:10 pm

      Great report!
      Savings like this make the best reason for everyone to use a Rx discount card even if they have insurance, Medicare, or Medicaid because the cards frequently beat the deductible or co-pay of those coverages. If a
      card beats their coverage, the card should be used instead of the coverage.
      I’ve found America’s Drug Card to be much better than GoodRx.

    • renren
      January 31, 2017 at 1:39 am

      90 pills of 10mg methylphenadate
      300 doolars thru insurance
      93 dollars with blinkhealth
      24 dollars goodrx at kroger

  13. Physician
    March 23, 2016 at 9:22 pm

    Excellent research. You just saved me several hours as I was beginning to follow the same trail to be able to better inform my patients.

    • August 13, 2016 at 7:32 pm

      When I researched Rx discount cards, I found that none beat the one I finally wound up with which is America’s Drug Card. Cards can be printed free online at AmericasDrugCard.Org/MedHelp and they also have a great one for out pet medications. They’re members of ADDCO, Association of Discount Drug Card Organizations, which means they have the highest rating in the US. On rare occasions, another discount card will equal or beat America’s Drug Card, but I’ve found it to be few and far between. I’m not in the medical profession but I think their card would greatly benefit any medical clinic or hospital to give to their patients. Hope this info helps.

  14. April 19, 2016 at 7:33 pm

    Hi, just read your article and wanted to clarify a few points.You have done a great job of summarizing the basics behind discount prescription cards.

    The bin number identifies the pbm, and you can find out who the pbm is by googling pbm bin numbers. There is a list by bin # and pbm.

    It is important to know the network (pbm) the discount card represents. You want to make sure that it is a well respected pbm that does not harvest and sell or distribute your medical info. If you are using a discount card which requires you to provide any personal data (telephone, name, address etc), this is a good clue that your data will be at risk of being sold or distributed). Also, if you see cards with different ID numbers, you have the same issue of being identified. You want to use a card where all the cards have same bin, pin, group and ID #. Also I would trust a a publicly traded pbm over a private network, due to enhanced compliance with regulators, established code of ethics, etc.

    A good discount card will have a pricing site where you can price your meds with various pharmacies, as the pharmacies can be vastly different. Be persistent if the pharmacy says the card won’t help you, so they don’t have to discount your meds. The pharmacies are legally contracted to accept these cards, and it is not discretionary. Ask the pharmacy tech to tell you what the discounted price is.

    It is great if you can get a discount pet prescription card to help with pet meds. Simply ask your vet for a script in the consultation room, then take it and the discount pet card to your pharmacy. Pharmacies love this business as it is a new revenue stream for them.

    Finally, you want a discount card that has low transaction fees, so more of the savings can go to the customer, instead of into the network (pbm). Some cards have high fees and pharmacies don’t like these cards (some pharmacies won’t even honor them).

    A last point of information is that typically discount cards don’t help on $4 and $10 generics. Also, brand discounts are usually less that 20%.

    We have been in the discount card business (BestRxCard.com) for eight years, and have a direct contract with our pbm.

    • August 13, 2016 at 11:30 pm

      Thank you for the informative feedback!
      I checked to see if your company is a member of ADDCO but it wasn’t in the listing. Is your firm now a member? ADDCO (Association of Discount Drug Card Organizations) as you’re most likely aware, is the national Rx discount card company qualifying organization.
      My wife and I researched 12 different Rx discount card companies including BestRx and checked all the top 25 drugs and most of the top 100 prescribed nationwide. We decided upon America’s Drug Card which can be printed free online at AmericasDrugCard.Org/MedHelp and they also have a great one for our pet medications. They are members of ADDCO, which has very strict qualification requirements, meaning they are 100% HIPAA compliant, have the highest quality rating in the US, have a website where prescription costs can be checked in any area of the USA, and do not collect ANY personal information – not even from the PBM.
      In fairness to other Rx discount cards, on rare occasions another would equal or slightly beat America’s Drug Card, but it was few and far between. Last week my pharmacist at Wal-Mart told me they now will only put ONE prescription discount card on their files for any patient and that it’s the only price they will check other than insurance, Medicare, or Medicaid. It’s important to have the best card on file with them!
      America’s Drug Card is most beneficial to anyone without insurance but I discovered that often their card would beat the co-pay or deductible or share-of-cost due with Medicaid, Medicare, and many insurance policies, and that it can be used instead of any of those coverages if the card discount is cheaper.
      Any medical clinic or hospital would do their patients a service to give these cards to their patients.
      I know they benefit my family! Hope this info helps.

    • PharmD
      March 11, 2017 at 1:28 am

      You are incorrect- not all pharmacies have to accept these cards- only ones where there is some contractual agreement. Small independent pharmacies lose money honoring these cards. They lose money even checking a price for you with that card. The PBM takes the money for the “service.”
      Also if you are moving pharmacy to pharmacy have a list of all your medications and give it to the pharmacy when you turn in the Rx to check for drug interactions and contraindications. Don’t just give it to the tech at the sale or the pharmacist at the consult- you won’t get as good of information then (not enough time- and look at that line behind you.)
      Also note the pharmacist name on your receipt that checked for the drug interactions/clinical problems, ie if you are prescribed furosemide and aren’t on potassium that can be a major problem. Might not be if you have kidney disease though. A clinic pharmacy that has your medical chart can review most completely the potential adverse effects and drug interactions. Some insurances are getting really good at alerting pharmacists to problems- duplications etc.
      But if you aren’t using insurance and you go to any and all pharmacies then you open yourself up to huge mistakes and problems. Give your pharmacist the tools to fill your prescription correctly and safely and if they bristle? You are at the wrong pharmacy.
      Pharmacists work very long shifts often with only a 30 minute break if they are lucky. It’s not the best situation-making decisions when they haven’t been able to leave the pharmacy for a restroom break all day- but if they work for a pharmacy that allows them a little time to do a job worthy of a Dr of Pharmacy- you are at the right place.

  15. EJG
    May 17, 2016 at 5:00 pm

    I use GoodRx for my wife’s drugs and the savings are significant. I’ve had to switch one or two prescriptions from Walgreens to Target or Walmart, but the savings are huge. One atorvastatin went from $140 to $20. The $140 was ridiculous to begin with since I use it with my Medicare Advantage plan and their total payout seems to be about $11. Go figure. Drug pricing is insane.

    • August 13, 2016 at 7:21 pm

      In my area of Florida, Atorvastatin 10mg tablets are $10.75 for a 30 day supply when using America’s Drug Card. It has beat every other discount card I checked (12 of them) on every medication my family uses. The savings with prescription discount cards is amazing!

    • Mary
      February 22, 2017 at 5:03 am

      We’re in Arizona. We’ve had wonderful insurance until 12/31/2017 when the insurance company notified us we’d loose our coverage. My husband goes on Medicare 6/1 so he took out a gap coverage and very high deductible health plan. This GoodRX has saved us a lot of money. Today 90 day supply $433 I pai $23.30. I had to change from Walgreens to Safeway Pharmacy but I’m ok with that for a big savings. I wondered how they could do this. Now I have a better understanding. Our physician told us about GoodRX. So thankful.

  16. Katherine
    June 30, 2016 at 3:38 pm

    I had a prescription filled at Walmart yesterday and they wanted $135. I printed the GoodRX coupon and went back and they accepted it and I was only charged $58. The clerk just typed in the info to their system and the lower price now came up. I’m happy for but it just shows how messed up our healthcare system is with so many different prices, who knows how much anything really costs, and those who can least afford it end up paying the most.

  17. Phoenix customer
    September 4, 2016 at 7:21 pm

    used the goodrx several times, even though we otherwise have pretty good rx insurance but for one reason or another couldn’t use it; with great savings resulting.
    Point of fact: afterwards, I see that the pbm for the rx i filled at a Kroger (fry’s) in Phoenix pharmacy was:
    Navitus Health Solutions

  18. September 25, 2016 at 1:30 pm

    I’ve used GoodRX for the last two years. I’ts saved me well over $1000.00 in prescription costs. With GoodRX, you get a list of the prices pharmacies charge for a certain drug. That price can vary significantly. I will always go to the store with the lowest price (duh).

    I have yet to find a pharmacy that doesn’t honor the listed price.

    GoodRX doesn’t do it, but I really don’t care if they sold my medical information to anyone. Other than providing the name of the prescription I bought, everything else already out there.

  19. Entrepreneur and growth marketer
    November 3, 2016 at 9:52 pm

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  20. December 10, 2016 at 2:55 am

    Got Rx for Doxepin 5% cream, 45 gm. Retail price $663.00 your insurance saved you $564, you pay $99.04

    I am retired pharmacist and could get some Doxepin tabs grind them up and mix into an ointment for a few dollars at most. Imagine retail price is $663, I ONLY paid $99.04 30 and 40 years ago prescriptions were the biggest bargain in the family budget, now its a shameful, sinful, shame. Try your best to pressure the politicians to stop the thievery.

  21. Ronak
    December 14, 2016 at 5:44 pm

    Great share ..I was wondering of one aspect i.e. how does the company get the pricing information from these pharmacies (mom-n-pop shops AND target, CVS etc types). Is this data available thru PBMs or is there any exchange ?

  22. dick overheul
    December 30, 2016 at 1:21 am

    I was told by Kroger that they could not accept the coupon if we had part d–mind you I was not trying to use both-just use goodrx instead. they would not accept it saying they could get in trouble if they were audited(by who I don’t know) if you went to a new pharmacy how would they know if you had part d or not if you didn’t tell them?
    is there such a rule or law forbidding the use of the coupon if you also have part d–

  23. David
    January 16, 2017 at 6:44 pm

    TY for this good work

  24. Jaan Pehchan Ho
    January 23, 2017 at 10:21 pm

    I used goodrx for both Folbic and generic Viagra, neither are covered by my insurance; and the Folbic was less than $15 and the generic Viagra was $31 for 30 pills. Not a bad deal at all. Everything else seemed to be cheaper through insurance.

  25. BL
    February 1, 2017 at 6:17 am

    As an owner of an independent pharmacy why would I accept a coupon from GoodRx. For example: If you bring a coupon into my pharmacy that says you should pay $75 for a drug that cost me $70. I process the information on the card and get charged $30 from GoodRx and the PBM. So I am losing $25 plus my time, vial, label, etc. I agree that drug prices are ridiculous but these companies like GoodRx are scams that are trying to get paid for doing nothing except for taking advantage of pharmacies.

  26. BillCale
    February 6, 2017 at 9:54 pm

    My wife received a prescription for a new dementia med last month. CVS is our local pharmacy and the Dr’s office electronically transmitted the prescription there. We are in one of the Medicare Advantage plans (Humana PPO) and the med was not covered well, resulting in a $386. bill for a 30-day supply.

    Today, after finding and registering at GoodRX, I paid $187. at Walgreens for her 2nd 30-day supply, utilizing the GoodRX discount. I had seen this same med as cheap as $117. at Walmart in previous weeks but apparently the pricing can change frequently- and wildly- as Walmart currently wanted $389.

    So… use the handy search feature on the GoodRX website (where you’ll get pricing), be ready to shop at different pharmacies and have your prescription in-hand so the pharmacy can give you an up-to-the-minute quote for your med. The savings really can be worth the additional trouble.

  27. dave
    March 14, 2017 at 4:20 pm

    Please note. Anyon who thinks the pharmacies are loing money doesnt understand how over priced medicationa are in the United States today.

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