
GoodRx S-1 - xoxoy
https://www.sec.gov/Archives/edgar/data/1809519/000119312520234662/d949310ds1.htm
======
Someone1234
GoodRx/Coupons creates some odd problems/interactions with insurance.

We were prescribed liquid Tamiflu (Oseltamivir) for a child with the flu. We
have high deductible health insurance. The insurance "discount" cost was $105.
The GoodRx price was $40.

But this creates an odd and illogical conflict: Hypothetically we should
always pay the lower price, but the higher price counts towards our insurance
yearly deductible and out-of-pocket maximum, whereas the GoodRx price does
not.

So we have a type of insurance specifically designed to encourage us to find
cheaper medical services, but GoodRx undercuts the insurance itself, forcing
us to choose between our deductible and the rational price.

The US should just outright ban insurance "discounts" (which are a fiction
anyway). That way everyone pays just one price: Cash, insurance, Medicaid, or
whatever. Plus then medical providers can actually publish realistic price
lists instead of fiction with "discounts" on the fiction.

~~~
dmurray
I'm not from the US and I know people love to criticise the US healthcare
system.

What's crazy to me about this is that the insurance doesn't work like a normal
home or car insurance: your car gets destroyed, you buy another car of the
same replacement value, you send the insurance company the receipt. Maybe you
fight with them over the exact replacement cost, but you get pretty close.

Instead, it sounds like the insurance company provides you with an opportunity
to buy medicine _from them_ at a hopefully discounted price. Or if not
technically from them - from their business partner.

Private health insurance in other parts of the world looks a bit like this
with regard to hospital treatment. There's a private hospital who's partnered
with the insurance company, and you can only get treated there if you have
private insurance. Which makes a certain amount of sense as hospital treatment
is not a commodity. But to apply the same logic to the part of the treatment
that is commoditized - the drugs - is a real triumph of capitalism.

~~~
est31
Many drugs are not commoditized (some might be). Often you have only one or
two manufacturers for some ingredient of a drug and if one of them has issues,
the entire supply chain collapses.

~~~
AtlasBarfed
You mean like Enron where they paid power companies to shut down to increase
spot prices and manipulate markets?

Monopolization of commodity drugs and the large price increases in the US
mirrors the cartel/monopoly conditions that have pervaded practically every
major market in the US.

Insulin and Epipens are two common examples of this, and it has killed people.
And the entire drama around Martin Shrekli.

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tiffanyh
> “ Our revenue has grown at a compound annual growth rate, or CAGR, of 57%
> since 2016, and reached $388 million in 2019, up from $250 million in 2018.
> Our net income was $66 million in 2019, up from $44 million in 2018, and our
> Adjusted EBITDA was $160 million in 2019, up from $128 million in 2018. Our
> revenue grew 48% in the first half of 2020 to $257 million, up from $173
> million in the first half of 2019. Our net income was $55 million in the
> first half of 2020, up from $31 million in the first half of 2019, and our
> Adjusted EBITDA was $101 million in the first half of 2020, up from $75
> million in the first half of 2019.”

Wow, that’s some healthy margins. Profitable for the last few years with
strong growth on both top line and bottom line.

~~~
koolba
Those numbers are incredible. It’s amazing how much fat there is to skim in
the pharmacy benefits scamola^Wbusiness.

~~~
maest
What command is ola^ ?

~~~
arcticbull
"scamola" \-- as in, scam. ^W implies closing the window and starting over.

~~~
kgermino
^W (control W) is actually delete the last word in Unix systems.

~~~
sbierwagen
And ^H is ASCII control character BACKSPACE. Back in the day, the ^H actually
_happened,_ accidentally. From jwz:

>Most people who understand what ^H means must have some sense that it is
somehow the same as "backspace", right? Well, what would happen is, someone is
typing on a dumb terminal that wasn't configured right, and as they typed
backspace, that character would go up to the server, not be interpreted as
"delete the previous character", and would be dutifully echoed back to the
tty. The tty would then itself interpret that as "delete the previous
character on the screen." So the person typing thought the characters were
gone, but oh no no.

[https://anon.to/?https://www.jwz.org/blog/2004/03/the-
unfroz...](https://anon.to/?https://www.jwz.org/blog/2004/03/the-unfrozen-
caveman-hacker-show/)

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orbitmech
If anyone else is curious on GoodRX’s business model, here is a good write up
I found from HBS [https://digital.hbs.edu/platform-digit/submission/goodrx-
or-...](https://digital.hbs.edu/platform-digit/submission/goodrx-or-greatrx/)

~~~
sam36
I don't think that is the full truth. Everyone in the industry seems to see
goodrx as dishonest and they all state the same story similar to this recent
one from reddit[0].

In my personal experience, the goodrx "coupon" for my drug was $30. Sure
enough, at the pharmacy, I was charged $30. But if I use the same coupon the
next month, the price is magically $57. I could print out a new coupon every
time, but the process with the pharm tech to change to a different "drug card"
(which is what they see it as) is nearly a 5 minute process. By contrast, my
state offers their own group drug card, and the charge is usually around $45.
It might go up or down by a few dollars every 6 months, but that is it.

[0]:
[https://www.reddit.com/r/explainlikeimfive/comments/ih4ziy/e...](https://www.reddit.com/r/explainlikeimfive/comments/ih4ziy/eli5_how_do_companies_like_goodrx_discount_your/g2yhhz1/)

~~~
marrone12
That comment does not understand how pharmacies get paid. The patient pay
amount is irrelevant to how much the pharmacy makes. Pharmacies make money
from prescription dispensing fees, which are generally around 1-2 dollars.
PBMs are the ones that make money on patient pay amounts and are the same ones
that pay the wholesalers, and they have different payout contracts depending
on which card is being used. GoodRx relies on these PBMs for business, who
have done the math on the arbitrage being in their favor. Source: I worked at
a GoodRX competitor a couple years ago.

~~~
refurb
I worked with PBMs in the past and it's more than just the dispensing fee.

Typically a pharmacy will enter into a contract with a PBM and the PBM will
reimburse the pharmacy for each drug at a set amount. That amount does include
a dispensing fee, but the pharmacy can also make money off the margin between
acquisition and reimbursement.

So if a months supply costs the pharmacy $30.

The PBM might pay $23 for the drug, $2 dispensing fee and tells the pharmacy
to collect a $10 co-pay ($35 total).

Pharmacy makes $5.

However, what I've heard is that it's never that simple. PBMs are constantly
trying to pay as close to acquisition cost as possible and when you have
multi-source drugs (generics), they often just pay the lowest price.

So I've heard from pharmacies that some drugs have a 50% margin and other have
a -20% margin. The PBM tells them it "all evens out" which is BS. The PBMs
also have DIR fees, where a couple quarters later they claw back additional
money, again arguing that the prior reimbursement was too high. The PBM model
is really trying to squeeze pharmacy margins as much as they can.

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zumachase
Wow...an S-1 with positive net income.

~~~
dogma1138
Yes but they don’t really have a way to expand outside of the US, they are
basically an answer to a uniquely American problem unless they’ll go they’ll
target the self medicating crowd that uses the relatively dodgy online
questionnaire/chat prescription pharmacies.

~~~
chimeracoder
> Yes but they don’t really have a way to expand outside of the US, they are
> basically an answer to a uniquely American problem

The US accounts for 45% of global pharmaceutical sales. Even if they're
limited to "only" half of the global pharmaceutical market, that doesn't sound
like the worst position to be in.

~~~
dogma1138
I think that’s for North American and it’s in revenue not in actual sales, but
yes that is currently the case but it’s also clear that the US health system
cannot continue as it does for much longer. So overall while they can clearly
profitably operate in the current market I’m not so sure about their
longevity.

~~~
gvhst
The market size and business opportunity is not measured by units sold but by
overall revenue. Am I missing something?

~~~
dogma1138
Yes you are missing the point that this company can only operate because of
just how utterly broken the US healthcare system is, and sooner rather than
later there will be sufficient political pressure to change that.

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refurb
I know a few pharmacists and they _hate_ GoodRx. Why? Because of the added fee
on top of the discount. They often end up underwater (losing money on the Rx).

I've even heard of some pharmacies doing a "cash price" match of GoodRx.
Customer is happy (still get lower price) and the pharmacy is happy (they
don't pay the GoodRx fee).

Makes me wonder about the longevity of the business model.

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nixass
Reading comments like this always reminds me how fucked up US healthcare (and
not only healthcare) system is. God bless CoMmUniSt EU

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ck2
Imagine the wild level of data they have on the US population, every person
with an illness or disease, their name, address, dob, everything in a billing
requirement.

The only problem is it is likely many more people without insurance than with
because of the nature of their product.

If that database ever leaks, wow there will be hell to pay, or maybe not,
hasn't really been in the past, did people ever get their $100 payout for the
other leaks?

[https://www.consumerreports.org/health-privacy/goodrx-
shares...](https://www.consumerreports.org/health-privacy/goodrx-shares-users-
health-data-with-google-facebook-others/)

------
dzonga
one of the few companies to file an s-1 recently with healthy numbers. cash
flow positive. profits. and considering state of us health care, I would buy
stock in this company

~~~
rvz
There you go. Actual numbers showing profitability on day 1 on IPO and none of
that "We may never reach profitability" disclaimer notices from bullshit hyped
startups out there racing to the stock market with only gigantic losses to
show; quarter after quarter.

What I see about GoodRx is sustainable and they are not even trying. I would
gladly buy this stock.

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petespeed
I was searching for their revenue model. Here is what page 21 of S1 says:

"To date, the vast majority of our revenue has been .. derived from our
prescription offering. When a consumer uses a GoodRx code to fill a
prescription and saves money compared to the list price at that pharmacy, we
receive fees from our partners, primarily PBMs. Revenue from our prescription
offering represented 97% and 94% of our revenue for 2018 and 2019,
respectively, and 95% and 91% for the first half of 2019 and 2020,
respectively."

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arcticbull
I absolutely hate GoodRx.

Its a symptom of a horrifying lack of medical coverage and care in this
country. If it actually becomes incredibly successful it will embody the same
perverse incentive structure as Intuit -- to remain successful they would be
best served by lobbying against universal healthcare and affordable medicine
in general so their offerings remain valuable. In the same way Intuit lobbies
against simplifying the tax code. Every time this happens it further
entrenches the existing nightmare.

Medicine in this country needs wholesale reform, not coupon clipping for
insulin.

[edit] Coupon clipping for life saving medicine is apparently as good an S-1
as it would be a Black Mirror episode.

~~~
bhupy
Why is coupon clipping for food (without which you starve and die) not a
problem?

One of the biggest problems with healthcare today is a lack of price
transparency, and GoodRx appears to offer that. Most healthcare systems in the
world operate on price transparency, and as long as that's the case, there
should always be a need for the services GoodRx offers.

~~~
arcticbull
> Why is coupon clipping for food (without which you starve and die) not a
> problem?

The government already does an awful lot to make food affordable in the US,
including subsidizing corn to well below the cost of production via continuous
re-authorization of the Farm Bill.

Then there's food banks, and SNAP. Both of which should be expanded.

The government does absolutely nothing to make drugs affordable. At all.

> Most healthcare systems in the world operate on price transparency, and as
> long as that's the case, there should always be a need for the services
> GoodRx offers.

Most healthcare systems in the world operate by having the government form a
bulk buying organization and negotiating the price of drugs down to a fraction
of what Americans are forced to pay even in places without socialized
prescription drug coverage.

The reason drugs in Canada are cheap is because the provinces negotiate the
prices, not because they socialize the costs. There is very limited socialized
prescription drug coverage in Canada. So when the government permitted re-
importation of drugs from Canada, they basically refused to negotiate
themselves and wanted to instead rely on Canadian provinces to negotiate on
their behalf. Nutty.

One way of solving this would be to have Medicare negotiate the price of all
drugs in the US.

[edit] There's lots of comprehensive solutions, and none of them involve
coupon clipping.

~~~
WarOnPrivacy
> there's socialized food for those in need, in the form of food banks and
> SNAP.

No there isn't.

That is, the places that tend to have usable, subsidized healthcare for the
poor are the same places that tend to have subsidized food for the poor.

Likewise for those that don't.

Source: Years with freq periods of little/no food (and 5 kids).

~~~
arcticbull
I agree those programs should be much better.

It's also worth considering that the US already spends the least amount on
food in the entire world [1] but the most in health care.

[1] [https://www.ibtimes.com/us-spends-less-food-any-other-
countr...](https://www.ibtimes.com/us-spends-less-food-any-other-country-
world-maps-1546945)

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RyanShook
Other than the app, how is GoodRX’s business model different from the multiple
other discount cards out there? What did they figure out that non of the
others did?

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aantix
How do they get prescription prices so low? And why can't insurance companies
negotiate similar deals?

~~~
lotsofpulp
They sell data. They might even assist insurance companies because I don’t
think purchases made via GoodRx apply towards deductible/out of pocket
maximum.

~~~
kevindong
Who do they sell the data to? It's certainly not the
insurer/consumer/PBM/pharmacy. Each of those groups already has near total
visibility as is.

~~~
headbansown
Life insurance companies (speculation - but they won't have the visibility
into Barry Boomer's cholesterol meds that his health insurer will)

~~~
lotsofpulp
You typically have to give permission for life insurance companies to access
all of your medical history when you apply for it.

~~~
headbansown
From your doctor, sure - but from databases of who bought what that the pt
consented to be in as a condition of getting a discount? Is GoodRx a HIPAA
covered entity? (Not being rhetorical; don't actually know.)

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justicezyx
Making profit off human well-being, I consider this a flaw of the capitalism.

There should be an easier fix than introducing another private for profit
entity in the health care system.

~~~
bhupy
Aren't food companies and grocery stores in the business of profiting off
human well-being?

~~~
adamnemecek
No, as they have very low margins.

~~~
bhupy
Right. The goal here is to make healthcare a low margin business also. High
margins are an indicator of a lack of competition.

