Way back when, medicine used to be simple.
Grind up, boil and drink a few roots here, employ a few leeches there. Pay a barber to do some bloodletting or cupping when necessary, and hope for the best. Those ancient remedies still have their adherents (along with the interest of modern medical researchers), but it’s safe to say that pharmaceutical practice has progressed more than a bit in the last few millennia, to the general delight of most human beings.
Of course, other problems have arisen — not the least of which is the complexity of drug pricing, along with the often-high consumer costs of vital prescriptions. However, data analytics and mobile commerce are being deployed to help ease those hassles.
PYMNTS recently caught up with Thomas Goetz, chief of research at GoodRx, a prescription marketplace that has put $10 billion back into the pockets of American consumers. The idea is to give them a choice of where to fill and refill those vital prescriptions at the cheapest cost, to learn more about that effort and how to ease the hassles of one of the most frustrating parts of healthcare retail.
“We try to make it simple for consumers,” Goetz said during an interview with Karen Webster — a comment that reflects the larger trend in online and mobile commerce to provide relatively seamless consumer experiences. “We want to make it as straightforward and clear as possible. We literally have billions of prices in our database. The idea is to optimize the best prices for a given drug, depending on the location of the user.”
As PYMNTS readers likely know, healthcare is in a state of historic disruption. Not only are scientific advances, new technologies and increasingly sophisticated data analytics techniques making medicine much more personalized (among other things), but the commerce and payments nature of the industry is changing as the digital revolution unfolds. Those trends are certainly playing out in the pharmaceutical industry, and in various ways.
For instance, Amazon has gotten into the medication and prescription-delivery game via its acquisition of online pharmacy PillPack. In addition, much attention is focused on solving the last-mile problem of prescription refills, an experience that is often frustrating and full of friction, as PYMNTS has recently explored.
That’s the larger context in which GoodRx is operating, though its mission seems relatively simple (but, perhaps, much more important) compared to other digitally focused prescription efforts directed at consumers. It’s all about operating a marketplace that shows consumers where they can buy what their doctors prescribe at the lowest price — assuming they are willing to pay out of their own pockets (and not rely on their insurance plans), use specific coupons and discount codes, and, perhaps, buy their medications from pharmacies that they might not otherwise use.
“It sounds simple, but it’s something in healthcare that’s never been done,” Goetz said. The price differences can be dramatic, he pointed out — a medicine might cost $10 in one retail location and $150 in another, depending on the factors involved in the pricing and cost to a particular consumer.
Lack of Transparency
The rise of healthcare benefits, and the development of better medications has, over the decades, produced a system that lacks price transparency and elasticity for prescription drugs.
There are various reasons for that, but among the main ones that hold sway in 2019 is that some 90 percent of “prescriptions in the U.S. are generics,” according to Goetz. That means a variety of manufacturers can be involved in similar drugs, and those manufacturers have differing pricing regimes. In turn, pharmacies must deal with multiple supply chains (to say nothing of constantly changing drug formularies and other insurance rules), and all those factors have an impact on what consumers pay for their medications.
“Each product is priced a little bit different, and comes through a different supply chain,” he told Webster.
To get another sense of the issue’s scope (pricing for needed drugs), think of it this way: Goetz said GoodRx has saved consumers some $10 billion in prescription costs. That’s out of $2 trillion to $3 trillion in annual spend on prescription medicine.
As a marketplace, GoodRx doesn’t negotiate with manufacturers, but uses data analytics to keep tabs on prices presented in the marketplace, a task that requires great accuracy and updates. After all, he said, prescription prices are in a state of constant change.
The company attracts some 10 million shoppers to its site per month, and runs advertising, providing one source of revenue. Subscription plans and referral fees from pharmacies provide more revenue when consumers redeem their coupons.
Not only that, but consumers who learn they cannot afford a particular medicine at a certain time leave behind some $200 million in potential pharmacy purchases annually, he said — healthcare’s version of an abandoned shopping cart. That’s not only money left on the table, but a potential negative impact on consumer health, especially when it comes to the vulnerable and elderly.
About 70 percent of GoodRx users have insurance, which speaks to the opportunity the business is exploring. Prescription medicine is an outlier, so to speak, when it comes to healthcare pricing. As Goetz told Webster, a person getting a surgery or similar medical procedure tends to think the higher the price, the better quality. However, that’s not usually the case with medication, where consumers are more apt to think they are victims of price gouging — which provides yet another opening for this type of service.
“People are looking for a better price” when it comes to prescriptions, he said. That desire is pretty revolutionary, and healthcare, as a whole, lacks the cost transparency that defines a classic free market. Yet, digital technology and the rise of personalized medicine are helping to slowly change those consumers expectations, and it seems certain that prescriptions will be part of those changes.