7

There are a variety of prescription discount card programs; I use GoodRX only as an example but my question applies to them all.

How do these things make money?

My local pharmacy just keeps a couple of discount cards at the register, and if a prescription is particularly expensive they'll ask if I want to try a discount card. Recently one of these cards brought a prescription down from $700+ to ~$22. I suppose GoodRX gets some amount of demographic info about me when I use the card but can they really make hundreds of dollars off of that info??? I just don't see where there's a viable revenue stream.

Improve this question
10
  • 1
    This is not really a question about Personal Finance.
    – Dilip Sarwate
    Commented Oct 21 at 16:18
  • 1
    Hi Crash Gordon. Welcome. Please note that this site deals with personal finance. I expect that your question will be closed as off-topic.
    – Tashus
    Commented Oct 21 at 16:20
  • 1
    As a side note, the drug probably costs nowhere near $700 to source, so they don't have to make all of that up using demographic info or whatever other revenue streams they may tap.
    – Tashus
    Commented Oct 21 at 16:22
  • 2
    These are US-centric programs. In the US, the medicine prices are extremely inflated compared to the actual costs (including amortized R&D costs), as such they provide huge profit margins for the brokers. GoodRX is one such broker and is acting on arbitrage. They still have margins, just smaller than the competition.
    – littleadv
    Commented Oct 21 at 16:32
  • 5
    @Tashus knowing how they make their money lets a person understand their risks when using them. Do I need to pay a monthly fee? Do I need to register? Do I have to only use generics?
    – mhoran_psprep
    Commented Oct 21 at 19:01

1 Answer 1

Reset to default
0

Nothing's off topic at reddit. If this is to be believed, https://www.reddit.com/r/pharmacy/comments/twfgh8/how_do_discount_cards_work/?rdt=54320

  1. the PBMs (Pharmacy Benefits Manager, a.k.a. 800 billion dollar trio of gorillas in the pharmaceutical industry) contractually require pharmacies to charge $700 for prescriptions, then offer it at the realistic price of $22 to their (the PBM's) customers' (typically health insurance providers) customers (insureds).
  2. The same PBMs then offer a discount card program to let non-customers get the discount too.
  3. Why? Because then the PBM gets to charge fees to the pharmacy as clawbacks/DIR Fees for the privilege of inserting themselves into the transaction. For example, fees can be as high as $8.50 for the $22 prescription.
Improve this answer
7
  • 5
    I think John Oliver has an episode on that. It's amazing what Americans take for granted that is absolutely bonkers to anyone else.
    – littleadv
    Commented Oct 22 at 23:42
  • 1
    What does PBM stand for? Online search didn't give me any useful.
    – quarague
    Commented Nov 25 at 7:32
  • @quarague Pharmacy Benefit Manager.
    – Sneftel
    Commented Nov 25 at 11:47
  • 1
    It's less that we take it for granted, and more that we are all stuck in a terrible system.
    – aslum
    Commented Nov 25 at 17:44
  • 1
    @aslum There's almost certainly a "socialism == communism == bad" assumption involved for many people. And Republicans are happy to perpetuate this.
    – Barmar
    Commented Dec 3 at 7:57

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .