The Potential Power And Many Perils In Attempting To Digitize The Rx Market

The digital Rx race is on, and it is crowded.  It’s not just a race between digital pharmacy newcomers like Amazon and Walmart taking on established pharmacy players like CVS and Walgreens, but a much border free-for-all, with a variety of up-and-comers like GoodRx, Alto, Capsule and Medly pushing to disrupt a historically fairly hard-to-move $465 billion U.S. prescription drug industry.

These firms are thinking outside the traditional boxes as they try to gain leverage, as evidenced by GoodRx’s recently-announced partnership with DoorDash that will see its network of drivers, also known as “Dashers,” gain access to GoodRx’s gold-level subscription program, which offers an exclusive rate to access prescription savings of up to 90 percent on more than 1,000 drugs, discounts for online doctor visits and free mail delivery for prescriptions.

“All Americans need more access to affordable healthcare,” said Doug Hirsch, co-CEO and co-founder of GoodRx. “Last year, we expanded our GoodRx Gold offering beyond exclusive discounts on prescriptions to include telehealth and mail delivery so patients can access affordable and convenient care along every step of their healthcare journey. Now, we’re excited to provide Dashers with a more affordable way to access Gold savings so these hard-working Americans can receive the care they need at a price they can afford.”

This affordable price will hopefully draw more gig workers into the healthcare system in general, and to GoodRx in specific, hopes the firm, consistently ranked #1 on PYMNTS’ ongoing Provider Ranking of Prescription Apps. It’s a smart move in a digital prescription race where entrants have found it harder than usual to pass incumbent players in the space.

The Persuasive Power Of Patient Inertia

The challenge digital players often run into as they try to disrupt the market with lower prices is consumers’ established habits.  Most patients with a regular physician already have a pharmacy on file for their prescriptions to be sent to — probably a CVS, Walgreen or Walmart.  Consumers can be persuaded to change — and lower-priced options that abound across digital Rx options are certainly intended to inspire that change — but as PYMNTS has covered in many contexts, pushing a change to something already habituated is usually an uphill battle.

Refills present a somewhat easier target, but still require consumers to take an additional step to set up an account. This is possibly a worthwhile endeavor for the estimated 66 percent of Americans prescribed medication for at least one chronic condition who will be taking medication indefinitely, and thus have maximal motive to save on price.  It’s less persuasive for a consumer who perhaps needs a few refills.

GoodRx’s smart move with its offering to gig workers, it seems, is going after a sub-segment of the population more likely to be uninsured and not have a general practitioner with pharmacy information already on file.  It’s much easier to habituate a group of consumers that don’t have a previous habit to overwrite.

Disrupting A Stubborn Market

The goal to make necessary medication available to more patients is a noble one — medication non-compliance is an endemic problem within U.S. healthcare and known to contribute to overall costs.

There are huge service gaps that technology can address,” Larry Cheng, a managing partner at Volition Capital, told Bloomberg.

But competing in the crowded market means more than offering lower prices and convenient delivery, which at this point has become table stakes in a world where Amazon sells six-month supplies of generic medications for as low as $6 and Walmart has rolled free and discounted prescriptions into Walmart+ subscriptions.  Pharmacy, according to its oldest and most established players, isn’t just selling pills to consumers.

“New entrants to the highly competitive pharmacy market come as no surprise to us. But CVS Health is a lot more than pharmacy — and pharmacy is a lot more than just delivering medications,” says Matt Blanchette, a CVS spokesman.  CVS and Walgreens spokespeople have affirmed there will always be demand for in-store pharmacists who can offer medical advice.

The innovators, however, have notably vowed to keep on coming.  Because even more than consumers want instore consultations, Eric Kinariwala, founder and chief executive officer of Capsule, told Bloomberg, they need access to necessary meds — and startups that can consistently deliver that access are what the industry needs.

“Pharmacy hasn’t had any meaningful innovation for the last 50 to 100 years,” he noted.