'A company like ours should not have to exist': How drug pricing needs to change to fit the modern world
GoodRx co-founder Doug Hirsch on how medicine and doctor visits need to change with the post-pandemic times.
Around 10 years ago, Doug Hirsch had a weird experience. "I took a prescription around to three different pharmacies and got three wildly different prices," he told Protocol. The system was "opaque, and impossible to figure out," he said. For Hirsch, the former VP of product at Facebook, that presented a problem to be solved.
Hirsch, with co-founders Trevor Bezdek and Scott Marlette, set up GoodRx in an attempt to do just that. "We managed to discover … how things were priced," Hirsch said, "and that there were actually ways to end-run the system that would enable you to save significantly." A $200 drug could be bought for just $5, for instance. "By gathering all these prices, we find that there are incredible ways to save."
GoodRx now lets consumers find drugs at the cheapest prices available, alongside a health services marketplace and its own telehealth product. As co-CEO, Hirsch thinks the company is part of a group bringing change to a fundamentally broken health system in the U.S. In a conversation with Protocol, Hirsch discussed the problems he sees, and how tech can help fix them.
This interview has been edited for clarity and length.
Neither you nor your co-founders have health-care-focused backgrounds. Do you think that helped you?
I think it 100% benefits us. Everyone we met who knew anything about it told us we were wasting our time, and told us that it would never work. [They said] nobody cares about generic drugs — to set the table here, [around] 4 billion prescriptions are sold in this country every year, and 90% of them are generics. Their overall consensus was, "Hey, we're happy to help you, but nobody cares about this." And we were like, "I don't think that's the case." I guess we were just naive enough. Whenever I explain this to people and they just go, "that makes no sense." That's the feeling we had — but because we're both data tech geeks, we were like maybe we can make it make sense.
You have a range of APIs that you offer developers. Who uses them?
We are in the information business, and we're pretty serious about our social mission. We believe that this data should get out there.
I think there's probably close to 1,000 people that either currently or have used it at some point. And we distribute lots of tools for physicians, because the secret weapon in our product is physicians who desperately want their patients to be able to afford the meds they prescribe. Sometimes insurance companies use it, or websites where people can compare prices. Tons of students use it, some research folks use it.
It's totally free, because it should be free. I say this, and people think it's a PR statement or something, but I would love someday to have our company not need to exist. I lived in England for a while, so I have some understanding of the NHS: It's such an advancement over what we have. A company like ours should not have to exist: People should be able to get the health care that they need, without having to do research and jump through hoops and get approvals. I spent an hour on the phone yesterday with a hospital because my son had a seizure six months ago, and I've got a stack of bills, trying to just get it straight. The amount of time and effort and energy being wasted in this country, it's mind blowing.
It seems like things are changing — what do those changes look like to you?
I'd love to say it's changing because everyone is just so motivated to change. The reality is that people have to change. Most people stumble onto GoodRx because they have a bad experience. There's this insecurity that permeates American health care. Now the Trump administration is trying to basically make preexisting conditions a thing again. That's part of why I started GoodRx because that same son I mentioned who had seizures, he could not get insurance.
Do you think more products like GoodRx will start appearing?
Yes. You're going to see more and more price transparency products. [But] it gets harder. We lucked out because with prescriptions, you buy it in a retail environment, you present a credit card, you do it frequently, you kind of vaguely know what [the drug is] called.
It gets much harder when you get into medical care because the gap between what a consumer calls it and what it's called on the medical records so you can compare prices is hard. If I have shoulder pain, it's not shoulder pain that's the medical code that's billed it's a radial blah blah blah. Also, you don't do it as frequently, so you don't think to compare prices.
So I think those categories are harder. I think there are certain categories that are really ripe for just going straight to cash [without insurance]. Obviously elective stuff — if you want plastic surgery, that's already happened. Big dental is going that way. I think there's lots of other categories where the insurance coverage is just so terrible: For example, mental health has terrible coverage in the U.S. And more and more doctors are just not in-network, so it becomes a cash experience.
This is just a personal experience of mine: I have high cholesterol, and my doctor said I want you to get a carotid artery scan. My insurance company says "we don't think that's worthy, we're not covering it." My doctor says, "I knew they would say that, I'm sending you to a guy down the street, they'll give you $100 cash rate." That's the future of health care right there.
How about the telehealth business?
It obviously exploded with [coronavirus], and now most reports are saying it's coming back down, for a few reasons. I think a lot of patients actually missed their primary-care physician and do want to see them. And so they were kind of filling gaps with it. There are obviously some specialties where it's really hard: I have a friend who's a dermatologist who said about a third of her visits she can do by telehealth, but she has to have hands on for two-thirds.
I think there are certain categories where telemedicine will actually make a real change. I'm kind of obsessed with mental health right now. I think for follow-ups, for ongoing care management, I can also do remote labs and tests where you can just send an order into a lab or they can send a kit to my house. I think there's a lot of remote monitoring stuff that's coming, like this watch that tells you my pulse, my heart rate and stuff like that. I think it's getting better — [but] we have a ways to go.
Are there any trends that you think aren't being talked about enough?
I am really excited about remote monitoring. The world I imagine, and I think it's starting to get there, is you and I are sitting here talking, and we're being 24/7 monitored by an AI data stream that basically says, "Hey, I've noticed that your heart rate's been elevated for the last three days — are you OK? What's going on?" That doesn't mean your doctor's talking to you, it's just an automated message that gets spit out. This idea of an annual physical seems kind of antiquated, versus a 24/7, 365 physical that's constantly monitoring whatever it can monitor, without you really having to do much. There's so many different things that can be passively monitored. The challenge here is who's paying for that, because my insurance most likely won't want to, unless it's a very expensive condition.
How much is regulation an obstacle?
We have these incredibly arcane and restrictive rules in this country. For example, the government can't negotiate with drug companies around drug prices. If you step back and take a deep breath and think about that: We're the largest purchaser of this product, and yet we can't negotiate on the price. That's just broken, that seems insane.
There are tremendously restrictive rules in place. Let's say I was to walk into my local CVS and the pharmacist said, "Doug, you seem like a nice guy, I'm going to give you half off the price of the drug." It's actually Medicare fraud, and the pharmacists could go to jail. It's stuff like that, where one of the reasons pharmacies like to work with us is because they can't lower prices on their own.
Is there any progress being made on tackling those regulations and modernizing them?
There is. I don't want to make it sound like the individual players are necessarily evil: I've been very pleased with how willing to work with us all the constituents of the health care system are. I don't actually think pharma is evil — I think pharma does exactly what our system has designed it to do. We're all counting on pharma right now to solve coronavirus, so they can't be all evil.
We're getting a lot of great progress. For example, one of the biggest pharma companies in the world called me a few weeks ago, and basically said, "We're so tired of this ridiculous insurance game. What if we just sold drugs directly through you guys? What if we just called it 50 bucks for a drug that may cost $500, and we just sell it direct?"
I think even traditional companies are going, "Wait a second, there's something here." If there's one thing we've contributed to the American psyche, it's that people understand there is a resource now, so I can compare prices. Once that happens, all the constituents need to actually start thinking about price. They can't just be like, "I'm gonna keep doing it the old way." I see some positive steps, [but] I still think we have a system that is broken in incentives.
Next in Protocol's Health Care Manual: What it's like to pivot a health startup in a pandemic