GoodRx is a game-changer since it gives access to cost-saving information on prescription medicine. Since it started in 2011, its goal has been to help people search for the most affordable medication in the market. Seems like a very straightforward business model, right? So how does GoodRx make Money?
GoodRx makes money in several ways within their platform. Paid premium subscriptions and coupon redemptions of members are the top income-generating ways for the business. They also offer online telehealth services through HeyDoctor and health provider “marketplace” within the GoodRx platform.
Lastly, they utilize their website to sell advertising space to pharmaceutical companies and professionals. Thereby GoodRx helps them to promote various products and services for patients.
All these options provide the continuous flow of revenue for GoodRx. No wonder the company has grown to be one of the fastest rising tech companies in the last decade.
Read on to know what the company is all about and how GoodRx makes money by leveraging the broken pharmacy pricing system in the United States.
How Does GoodRx Make Money?
A simple, straightforward mission drives GoodRx: To aid Americans in finding prescription medicines that are well within their budget.
Meet Good Rx’s Founder
It is the brainchild of tech executive Doug Hirsh who was encouraged by his own experience. In his interview with Fortune, he said– “It’s so broken. You’re afraid to go and purchase because you have no idea what you’re going to pay”, about the current pharmacy pricing system.
Hirsh Found a Partner in Trevor Bezdek
Hirsh knew he was not alone in this sentiment and found a partner in Trevor Bezdek, another tech executive who shared the same beliefs when it came to healthcare. Together they were fueled by the need to bridge the gap between the consumer and the massive pharmaceutical industry.
It took them almost a year to research. Many people along the way had doubts. They said the initiative would never work and that universal insurance and the Affordable Care Act will render the information they want to put out obsolete in no time.
But ten years down the line and still GoodRx provides consumers the chance to compare prices and find discounts on prescription drugs at more than 70,000 pharmacies in the whole United States.
Ranks 20th on the 2020 CNBC Disruptor 50 list
GoodRx ranks 20th on the 2020 CNBC Disruptor 50 list. This list ranks private companies that have shown a rapid pace in technological change through their continuous growth even during this ongoing pandemic.
Top 4 Sources of GoodRx’s Revenue
It still is a wonder how such a company makes money out of helping consumers save money. So how does GoodRx make money after all?
Here are the top four sources of revenue for GoodRx:
1. Coupon Redemptions
GoodRx provides its users the ability to compare prices of prescription drugs and savings on costs. Users can do this by comparing coupons from participating pharmacies across the United States. There are over 70,000 pharmacies that work alongside GoodRx, including some of the biggest names in the pharmaceutical industry:
- CVS Pharmacy, and
Of the over 150 billion prescription pricing data points, a GoodRx user gets to choose the pharmacy to purchase from and a corresponding coupon code to use.
Profits Come from the Pharmacy Benefits Managers (PBMs)
GoodRx then collects its portion of the revenue whenever a coupon code is used. The profits come from the Pharmacy Benefits Managers (PBMs) that GoodRx collaborates with. These profits can either be a percentage of the sales or a fixed payment per transaction made.
In connection to this, GoodRx also makes money every time a customer refills a prescription through their site and their partner pharmacy. Once a member uses their coupon, the code is saved in their profile at the pharmacy.
It is a customer-centric business model in providing savings and convenience to users in getting their prescription medicines via the GoodRx website.
2. Monthly Subscription Fee
In 2017, the company launched GoodRx Gold, their premium subscription program offering a monthly renewable membership that discounts over 1,000 prescription drugs and various healthcare services.
GoodRx Gold’s partner pharmacies include:
- Kroger, and
- Thousands of other pharmacies across the United States.
GoodRx Plan Options
Two plan options are available at very affordable price points. The individual plan is priced at $5.99. Meanwhile, the family plan is at $9.99, wherein you can add up to five family members, including pets!
GoodRx Gold promises 90% savings on prescriptions and that their prices can even be lower than any insurance co-pay. This is helpful to families who have more than one person in need of maintaining their prescription medicines for a long time.
Again, how does GoodRx make money? GoodRx makes money by selling their technology, ads, referral fees, and lastly, thru their subscription services. This platform helped around 100 million Americans in saving about $10 billion on prescription drugs.
3. Online Telehealth Services
The GoodRx brand will not be holistic without the various telehealth products and services they offer. Included in these services are periodic health checks and Covid testing.
Comparison Platform for Third-party Medical Services
Similar to the original GoodRx model, they also have a comparison platform for third-party medical services. As a patient, this gives you the freedom to choose what you can afford based on your needs.
HeyDoctor by GoodRx
They also offer HeyDoctor by GoodRx. This service allows patients to connect with doctors vetted by GoodRx to provide a wide range of medical services. These doctors treat acne to hair loss to even treating depression and anxiety.
Note that these services will not require insurance. Consultation starts at $19. GoodRx also makes a good chunk of its revenue from this service.
Marketplace for Medical Professionals
GoodRx also has a marketplace where medical professionals not employed or affiliated with GoodRx can offer remote services. This is a commission-based operation where GoodRx collects a fee for each successful sign-up via the marketplace.
4. Advertising Within the Platform
Pharmaceutical companies have different affordability solutions for patients, especially for branded medications. And since insurance may not cover these medications, every way a patient can save on costs is worth trying out.
This is where advertising within the GoodRx platform comes in. Pharmaceutical companies work with GoodRx to advertise affordability solutions, such as:
- Patient assistance programs
- Co-pay cards
These solutions help make expensive medication more affordable for patients.
Through this partnership, GoodRx gets a fixed fee in return for the exposure of advertisements on its platform. Campaigns run for a specific period depending on what has been agreed upon between the pharmaceutical company and GoodRx.
GoodRX Business Model
Through the years, GoodRx has built and maintained a robust platform that disrupts the pharmaceutical industry to its core. Their success is shown in their revenue. In 2019, GoodRx collected $364 million in fees alone.
But this business model is not all positive for everyone involved. Many pharmacies lose money by partnering with GoodRx. For one, they miss out on the potential revenue from a customer who could have grabbed the first brand known without knowing comparative pricing.
Another disadvantage is that the customer pays GoodRx a fee when they buy from a certain pharmacy anyway.
Regardless of who earns more in revenue between pharmacies and GoodRx, the vital thing to note is that GoodRx has given consumers the power to take charge of their spending.
Conclusion – How Does GoodRx Make Money?
What started as a simple idea out of a negative experience became one of the fastest-growing tech companies of modern time. GoodRx was quick to utilize the broken system of pharmacy pricing, and it became a convenient and helpful way for patients to find the most affordable prescription drugs.
The benefits and convenience the platform provides its users quickly translate to the revenue, which only shows how lucrative this type of business model is. There have been several other companies that started a similar platform like GoodRx.
Still, they remain the biggest and most successful company of its kind, generating a whopping $550.7 million in revenue for 2020 alone, a 42% increase from 2019 at $388.2 million.
So, How Does GoodRx Make Money?
Simple business model but complex in its web of partnerships within the pharmaceutical industry to provide a solution to a long-standing need of Americans. Here are the four primary ways GoodRx makes money:
1. Coupon Redemptions
GoodRx knows Americans love great deals and discounts. Spending on healthcare can be costly, and discount coupons ease the high cost of prescriptions.
On top of the power to comparative pricing of prescription drugs, the discount coupons give users a sense of control on how much they can afford for their health. Not to mention that awesome feeling of saving on the costs of expensive medicine.
2. Monthly Subscription Fees
Like any modern-day business venture, the feeling of exclusivity that comes with a premium subscription gives added value to the consumer and the business itself.
GoodRx earns a good portion of its revenue from GoodRx Gold, where members shell out $5.99 a month for an individual subscription and $9.99 for a family plan. The best part of this is its 30-day FREE trial period; no commitment is required until you know you’re delighted with the service.
3. Online Telehealth Services
GoodRx will not be complete without online telehealth services that are much needed, especially with this ongoing pandemic. Consulting with healthcare professionals remotely is an easy and effective way to remain updated with your health and wellness without being at risk for Covid-19.
GoodRx utilizes their platform even more to provide access to healthcare services remotely through HeyDoctor by GoodRx for their partnered health professionals. Starting at $19 per consultation, you can be sure to get the advice you need at the comfort of your own home.
Similarly, GoodRx also offers a sort of online marketplace for third-party healthcare professionals to provide their services to potential patients, with a wide range of services and expertise available to choose from.
4. Advertising Within the Platform
An average website can only hope to be successful if no form of advertising is offered within the platform. GoodRx knows this fully and has utilized its platform to address other concerns consumers still might have about healthcare.
Pharmaceutical companies can advertise their brand and affordability options such as co-pay cards to boost their sales within and outside the GoodRx platform. A recall is one of the most powerful tools in business, and for these companies to use GoodRx for advertising, they get a much higher chance to score more sales within the GoodRx platform.
The GoodRx business model is a holistic approach to what is lacking in the healthcare system in the United States. Patients are almost always tied to shelling out on expensive prescriptions, especially if not covered by universal insurance.
The very goal of GoodRx is to empower Americans to choose how they want to spend on their healthcare. With the broken pharmacy pricing system still in place, GoodRx gives consumers the power back to choose and spend wisely.
Healthcare is a fundamental human right and must be afforded to everyone regardless of status. GoodRx is on a roll to bridge the healthcare gap, making it a convenient, helpful, and customer-centric platform that can only ever change the industry for the better.