Great write-up...definitely forwarding to friends! I know folks who have worked in the industry for decades and still don't fully understand these dynamics.
GoodRx is screwing pharmacies and selling patient data. When they are setting the price at half of acquisition, pharmacies are being stolen from. They should not be celebrated in any way. The last thing we need is more middlemen to try to get around existing middlemen.
The fix is to eliminate PBMs entirely. We are seeing huge savings in plans that pay directly. They have grown into an expensive and unnecessary problem that we all subsidize in multiple ways. The industry should be dissolved entirely.
Great article though. You did a great job explaining such a complicated industry. There are some lines in here I will be using when explaining PBMs to people.
@jeremy Are you saying that GoodRx is paying the pharmacies 50% of what the pharmacies themselves pay to the wholesalers? If so, why would the pharmacy accept that offer from GoodRx? They don't have to accept it, do they? From the article, it sounded like they were getting what they were already accepting from existing PBMs, it's just that GoodRx was offering those rates to otherwise uninsured patients.
@Gabe great questions and thanks! Jeremy is right — pharmacies do end up getting the short end of the stick. PBMs sometimes negotiate contracts such that they are paying the pharmacy less than what it is costing the pharmacy to acquire the drug from the wholesaler. In that case, the pharmacy is losing money on the sale of every drug. For some pharmacies, the front part of the store (where they sell food and all) ends up subsidizing the actual pharmacy itself.
So, with the GoodRx coupon, the pharmacy will now get paid this lower negotiated rate, which might not be enough to cover costs of the drug. Pharmacies don't really have a choice but to accept the coupon because the PBM can force them to and the patient can just go to another pharmacy that does accept the coupon.
The problem is that we have no control over these "negotiations". The contracts are take it or leave it by the big 3 because they control 80% of the market and will not negotiate with us. In fact, they make constant changes and send us a fax to let us know how much more they are going to steal from us. This would be illegal in any other industry. All GoodRx has done is allow middlemen to figure out a way to suck money from the pharmacy cash business while contributing nothing of value to actual patient care.
Ahh.. that explains why the cheapest GoodRx option I see is usually Safeway, which probably sees their pharmacy as a loss leader. Come in for the prescription, then go grocery shopping for the week.
That is a huge problem for the industry. Despite what PCMA argues, pharmacies do NOT use prescription sales as a loss leader. Front end sales are nowhere near what can be achieved with prescriptions. This is a talking point that has been disproved many times. No one is going to take a hit on tens of thousands worth of sells every week to bolster a few thousand. Safeway probably takes those contracts the same reason Kroger does, because a lot of people in charge do not know what they are doing because they do not understand the actual value of their pharmacy.
I don't accept them. In fact, a lot of times my cash prices already beat what GoodRx is setting. The other times, we see a huge loss. I looked up pilocarpine drop prices and would've lost $45 on the prescription. So even if I accepted or matched a GoodRx card price on the ones that my price would've already beat and made a little more, that loss would have cleared out any of those gains. GoodRx is just another problem that bastardizes our industry when people could simply pay a pharmacy directly instead of enriching more middlemen and driving up costs for all.
Wow, it seems like pharmacies have it really rough :( I would love to chat more and learn about your experience running a pharmacy. Would you be open to quick chat sometime?
Great write-up...definitely forwarding to friends! I know folks who have worked in the industry for decades and still don't fully understand these dynamics.
Thank you! Yup, it's definitely so convoluted and hard to wrap your head around!
Great article thank you!
Thank you! Really appreciate it :)
GoodRx is screwing pharmacies and selling patient data. When they are setting the price at half of acquisition, pharmacies are being stolen from. They should not be celebrated in any way. The last thing we need is more middlemen to try to get around existing middlemen.
The fix is to eliminate PBMs entirely. We are seeing huge savings in plans that pay directly. They have grown into an expensive and unnecessary problem that we all subsidize in multiple ways. The industry should be dissolved entirely.
Great article though. You did a great job explaining such a complicated industry. There are some lines in here I will be using when explaining PBMs to people.
@jeremy Are you saying that GoodRx is paying the pharmacies 50% of what the pharmacies themselves pay to the wholesalers? If so, why would the pharmacy accept that offer from GoodRx? They don't have to accept it, do they? From the article, it sounded like they were getting what they were already accepting from existing PBMs, it's just that GoodRx was offering those rates to otherwise uninsured patients.
And definitely agree. @Matreyee Great article!
@Gabe great questions and thanks! Jeremy is right — pharmacies do end up getting the short end of the stick. PBMs sometimes negotiate contracts such that they are paying the pharmacy less than what it is costing the pharmacy to acquire the drug from the wholesaler. In that case, the pharmacy is losing money on the sale of every drug. For some pharmacies, the front part of the store (where they sell food and all) ends up subsidizing the actual pharmacy itself.
So, with the GoodRx coupon, the pharmacy will now get paid this lower negotiated rate, which might not be enough to cover costs of the drug. Pharmacies don't really have a choice but to accept the coupon because the PBM can force them to and the patient can just go to another pharmacy that does accept the coupon.
The problem is that we have no control over these "negotiations". The contracts are take it or leave it by the big 3 because they control 80% of the market and will not negotiate with us. In fact, they make constant changes and send us a fax to let us know how much more they are going to steal from us. This would be illegal in any other industry. All GoodRx has done is allow middlemen to figure out a way to suck money from the pharmacy cash business while contributing nothing of value to actual patient care.
Ahh.. that explains why the cheapest GoodRx option I see is usually Safeway, which probably sees their pharmacy as a loss leader. Come in for the prescription, then go grocery shopping for the week.
That is a huge problem for the industry. Despite what PCMA argues, pharmacies do NOT use prescription sales as a loss leader. Front end sales are nowhere near what can be achieved with prescriptions. This is a talking point that has been disproved many times. No one is going to take a hit on tens of thousands worth of sells every week to bolster a few thousand. Safeway probably takes those contracts the same reason Kroger does, because a lot of people in charge do not know what they are doing because they do not understand the actual value of their pharmacy.
I don't accept them. In fact, a lot of times my cash prices already beat what GoodRx is setting. The other times, we see a huge loss. I looked up pilocarpine drop prices and would've lost $45 on the prescription. So even if I accepted or matched a GoodRx card price on the ones that my price would've already beat and made a little more, that loss would have cleared out any of those gains. GoodRx is just another problem that bastardizes our industry when people could simply pay a pharmacy directly instead of enriching more middlemen and driving up costs for all.
Wow, it seems like pharmacies have it really rough :( I would love to chat more and learn about your experience running a pharmacy. Would you be open to quick chat sometime?
Always. Hit me up on twitter @hokiepharm and we'll arrange something
Perfect, just messaged!
Great article! I absolutely recommend this to everyone
Thank you! Really appreciate it :)
Isn't this a typo: "Pharmacy buys drug A from the wholesaler for a small premium: 100 USD"? it should be 105 USD, right?
Great eye! Yup, it should have been "the pharmacies would buy Drug A from the wholesaler for a small premium (i.e. $100)" instead of "(i.e. $105)."
Fixed it! Thank you for pointing it out!
Great article 👏
Thank you! Really appreciate it :)
Fantastic post
Thank you! Really appreciate it :)
Thank you! Really appreciate it :)