system
Given the following post, respond as if you're commenting on Reddit:
human
Eli5: How does GoodRx work..?

How are they able to save money for so many patients without going into loses?
gpt
Healthcare gets really weird in the United States. When you look at the price of medications, it usually has very little to do with the actual cost of making the medication, and much more to do with a lot of other things.

Let's make up some numbers and say drug A costs $1 to mass-produce a 30-day supply in a factory in India. Shipping and storage add costs, so the pharmacy pays $2. The pharmacy has to keep the lights on and pay its pharmacists and pharmacy techs, but they do a lot of volume and keep things efficient, so charging $10 for the prescription means they can turn a small profit.

Now, let's say the pharmacy takes Insurance B. Last year, they told the insurance they needed $10 to break even, but the insurance is trying to keep costs down as well, so it said it would only pay 80% of that. The pharmacy is losing money, so this year it claims it needs $15. Insurance cuts their payment to 66%, but that's just enough for the pharmacy. Repeat this cycle until the pharmacy is claiming $100 and the insurance is paying $12. \[In reality this gets even weirder, because a pharmacy one block away may be charging ten times more or less. The contract is actually with something called a PBM, which is a sort of middleman that has been the target of many lawsuits.\]

Now, a customer with no insurance shows up. The pharmacy has sworn in its contract with insurance that the true and appropriate price for drug A is $100, and cannot charge the customer less without getting in trouble.

GoodRx has its own set of agreements with insurance/PBMs. It simply provides a contract-legal way for that patient to access the same kind of "discount" pricing that insurance B offers That's the incredible thing: GoodRx doesn't actually pay for this discount. GoodRx actually takes a cut from what the customer pays (and pharmacies are more or less willing to go along with this since it still means steering a customer towards them, not that they have much choice.) What it does is allow customers who aren't using insurance to access the "discount" that someone using insurance would get. It's a sweet gig that exists because the American healthcare market is seriously distorted.

This same problem exists a lot in American healthcare. Hospitals charge an enormous fee, knowing that insurance will only pay a small fraction (which is closer to what the hospital actually needs to keep the lights on.) Uninsured patients must be charged that full enormous amount, because that's what the contract said.

**TL;DR: GoodRx exploits a sort of contract loophole that allows people to access discount rates, and gets paid to do so without having to spend anything.**