GoodRx Acquisition Shows Strong 1Q Performance, May Disrupt PBM Business

by Peter Johnson

Prescription drug shopping app GoodRx, Inc.'s 2021 is off to a good start, with strong growth in its first publicly traded quarter yielding enough liquidity for the startup to purchase one of its competitors, RxSaver, for $50 million in cash. Experts say the deal and the company's strong results are proof that it is here to stay, regardless of how retail giants like CVS Health Corp. and Amazon.com Inc. try to shake up the prescription drug market.

GoodRx reported 20% revenue growth year over year for the first quarter of 2021 and 9% growth in prescription volume. It acquired health and wellness video production company HealthiNation in April.

GoodRx gives consumers more transparency and notable savings in point-of-sale drug prices, but critics have pointed out that the company’s model doesn't address the ballooning list price of prescription drugs by allowing consumers to circumvent the rebate system — and may even contribute to list price growth in the long run.

Ge Bai, Ph.D., an associate professor at Johns Hopkins University's Carey Business School and Bloomberg School of Public Health, says the RxSaver deal is evidence that GoodRx has promising prospects.

"This is a sweet deal," Bai says. "They're crushing their competitors."

She observes that RxSaver is "very affordable" for a firm of GoodRx's size, and says that the deal seems to be a play by GoodRx to further expand its market share.

Ashraf Shehata, national sector leader for health care and life sciences at KPMG, says he expects GoodRx will disrupt PBM rebating as it consolidates its position.

He adds GoodRx could expand its contracting reach to disrupt the PBM business itself by going direct to consumers — not just operating at the outer margins of the drug channel.

Shehata can see a future where GoodRx "is more like a PBM model, where they're going to offer kind of extended, membership-like services. One of them is going to be a point-of-care model. Some of them are literally sold right there at the pharmacist on the front end. And then this web front end. So to me, it's now going to be a combination of all of these things. I think you're going to see more of these kind of direct-to-consumer pharmaceutical products that are not directly a PBM infrastructure, but more of a program where you can afford direct-to-consumer rebating."

From RADAR on Drug Benefits