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GoodRx: A Band-Aid, Not a Cure, for High Drug Prices

I first became acquainted with GoodRx through the company’s television ads. Usually centered around a cost-conscious patient trying to fill a prescription, at some point during the ad a pharmacist tells the patient that they could save a significant amount of money on their prescriptions by using the GoodRx app.

According to the company’s origin story, three tech entrepreneurs conceived of GoodRx after realizing the absurdity of a system in which prices vary widely, yet are hidden from consumers. A recent U.S. PIRG report found that consumers could often save thousands of dollars a year on their medications just by shopping at a different pharmacy.  To address the problem, GoodRx decided to improve price transparency and save consumers money by listing prices for each pharmacy, as well as drug company coupons, in a consumer-friendly app. In return for connecting buyers and sellers of drugs, the company takes “referral fees” from pharmacies, pharmaceutical benefit managers (PBMs), health plans and drug manufacturers.

The fix is an ingenious one, but like so many tech innovations, is a retroactive, surface-level solution to a deep and complicated problem. It’s no secret that Americans pay too much for pharmaceuticals. In fact, at $1,200 per person per year, the U.S. leads the world in per-capita spending on prescription drugs. There are many reasons why prescription drug prices are so high, including the lack of transparency in pricing, which allows drug makers and providers to capitalize off a customer’s lack of information.

To illustrate the point, think of a common shopping experience – that of buying a couch. Before a person chooses to buy a couch, they can go online, compare prices, and then go to the store to try it out. They have full knowledge of the price of each model.

Now imagine a person was couch shopping but had no idea the price of the couch until they approached the attendant at each store. The same couch might be available at multiple stores, some of which offer discounts, but none of the discounts or prices are advertised. It would be no surprise if some couch-buyers avoided the trouble of comparison shopping and wound up paying more as a result. And it would also be no surprise if some furniture stores took  advantage of a consumer’s lack of information in order to charge more.

GoodRx tries to make buying prescription drugs more like the process of shopping for a couch, at least as far as price transparency is concerned. But solutions like this are far from a cure-all for managing the sky-high cost of pharmaceuticals in the U.S. Instead, we need larger policy reforms that seek to untangle the complicated world of pharmaceuticals. Some state-level reforms might include the creation of public databases of prices for pharmaceuticals, a requirement for drug manufacturers to inform the government if they raise prices above a certain level, and mandatory disclosures of the concessions provided to PBMs by drug producers. On the federal level, we need policies that reduce abuses in the patent system and encourage the development of generic drugs.

Services like GoodRx are a useful patch over a tattered system that does not work for the benefit of consumers. The complicated and hidden world of pharmaceutical pricing adds to total health care spending, and I’m personally glad that entrepreneurs are trying to improve transparency for consumers. However, tech solutions alone will not fix this broken system. Policymakers need to pursue bigger reforms if we’re ever going to have access to pharmaceuticals in a way that protects both our financial and physical health. 

Photo Credit: Cynthia Griggs via U.S. Air Force, CC-BY-1.0