How does GoodRx make money?

The company makes most of its money from fees when someone uses a GoodRx code to fill a prescription

Like seemingly all other aspects of the healthcare industry, prescription drug prices are on the rise. A report from AARP in June found that prices for 260 commonly used medications rose 2.9% in 2020, while the general rate of inflation was 1.3 percent. Not only that, but more of that is being passed onto the consumer: between 2015 and 2017, out-of-pocket drug costs increased 3%. Prices are going up, and more money is coming out of our pockets. 

The thing is that, most of the time, people don't need to buy these expensive medications: there are cheaper alternatives, like generics. Plus, the drugs might also be cheaper depending on where you get them.

That's why GoodRx was created: to offer people a free price comparison tool so they could save money on their prescription drugs.

"GoodRx was founded to solve the challenges that consumers face in understanding, accessing, and affording healthcare. We started with a price comparison tool for prescriptions, offering consumers free access to lower prices on their medication. We wanted to help ensure that no parent had to choose between their child’s next meal and their life-saving medication," the company wrote in its S-1 filing with the SEC last year.

To use GoodRx, all someone has to do is go to the home page, type in the name of the drug and click the “Find the Lowest Price” button (the company will also help spell the name of the  drug, since the names can be confusing). It will then present coupons that the user can give to their pharmacist so they can pull up the lowest discount available.

"While the medication distribution and pricing system underlying the pharmacy’s retail experience is extremely complex, we provide consumers with price transparency through a simple, easy to use, and convenient digital interface. We do so through our proprietary platform, which aggregates over 150 billion prescription pricing data points from a variety of different healthcare sources every day to provide consumers with comparison tools and access to lower prices," the company wrote.

GoodRx coupons are accepted at over 70,000 retail pharmacies in the United States, Puerto Rico, and the U.S. Virgin Islands; that includes chains like CVS, Walgreens, Kroger, Rite Aid, Costco, and Walmart. So far, it says it has saved consumers $30 billion to date and it estimates that, since 2011, it has helped more than 18 million people.

The company currently makes the majority of its money from what it calls "prescription transactions." That means that when a consumer uses a GoodRx code to fill a prescription and saves money compared to the list price at that pharmacy, the company is paid by its pharmacy benefit manager partners, most of the time taking a percentage of the fees that the PBM charges to the pharmacy, though some contracts allow for a fixed fee per transaction. 

In its latest quarterly earnings, the company made $144.9 million from this revenue stream, up 32% year-over-year. It accounted for 82% of the total $176.6 million the company made during the quarter. 

GoodRx also makes money through subscriptions; while the platform is free to use, the company also allows users to pay extra for its Gold offering, which it launched in 2017. The company charges $5.99 per month for individuals, and $9.99 for up to five family members, to give greater discounts for people who take multiple prescription drugs. The company also launched Kroger Savings in 2018, which costs $36 for an individual and $72 for a family, a portion of which GoodRx shares with Kroger. 

In all, this segment accounted for $14.3 million, or 8% of total revenue in Q2, up 125% year-over-year as the the number of subscription plans across GoodRx Gold and Kroger Savings Club rose 86%.

Finally, the company has what it calls "other revenue," which consists of two legs: the first being its pharma manufacturer solutions, in which the company collects revenue when its partners pay to advertise and integrate their affordability solutions into GoodRx the platform.

"Approximately 20% of the consumer searches on our platform are for brand medications. Brand medications tend to be expensive, and insurance coverage is complicated and may be restrictive. Pharmaceutical manufacturers provide affordability solutions such as co-pay cards, patient assistance programs, and other savings options so that consumers can access their medications," wrote Good Rx.