AEE13: Have You Ever Wondered How GoodRx Makes Money? With Ge Bai, PhD, CPA

In this health care podcast, Ge Bai explains GoodRx’s business model and how PBMs and pharmacies fit in to that business model. Here’s the short version: GoodRx takes advantage of the dysfunction in the pharmacy supply chain. And while they help patients save money, their master plan only works because pharmacies would be charging cash pay patients too much in most circumstances. Why, you might ask? Well, one reason is the big PBMs have contracts with pharmacies that stipulate the PBM must get the best prices. So, any patient wandering in off the street without a PBM card is going to always pay more than the rate a PBM can get for its patients. So, a pharmacy’s list price will always be more than the PBM price.

I’ll let my guest in this episode, Ge Bai, explain this better and get into a few details; but that’s kind of the general level set there. Ge Bai, PhD, CPA, is an associate professor of accounting at Johns Hopkins Carey Business School and associate professor of health policy and management at Johns Hopkins Bloomberg School of Public Health.

This “An Expert Explains” goes very nicely with EP306, in which Ge Bai and I talk about Amazon’s pharmacy and pharmacy model. So, you might want to check out that episode if you have not listened to it yet.

You can connect with Ge on LinkedIn and Twitter. You can also learn more on her Web site at Johns Hopkins University.

Ge Bai, PhD, CPA, is an associate professor of accounting at the Johns Hopkins Carey Business School and associate professor of health policy and management at the Johns Hopkins Bloomberg School of Public Health. She is an expert on health care pricing, policy, and management. Dr. Bai has testified before the House Ways and Means Committee, written for the Wall Street Journal, and published her studies in leading academic journals such as the New England Journal of Medicine, JAMA, JAMA Internal Medicine, Annals of Internal Medicine, and Health Affairs. Her work has been widely featured on ABC, CBS, NBC, Fox News, CNN, and NPR and in the Los Angeles Times, New York Times, Wall Street Journal, Washington Post, and other media outlets and used in government regulations and congressional testimonies.

01:53 What’s the difference between GoodRx and Amazon Pharmacy?
02:17 “GoodRx pharmacy makes money from one fact, and one fact alone.”
03:43 “On the surface, it looks like the patients are paying cash without any middleman; but in reality, the patients are paying cash by using a network created by a PBM.”
04:52 “GoodRx contracts with a network of PBMs.”
06:06 Where does the pharmacy fit in this deal?

You can connect with Ge on LinkedIn and Twitter. You can also learn more on her Web site at Johns Hopkins University.