The idea that a price comparison site for prescription drugs could be a multibillion-dollar business would be unfathomable in many parts of the world.

Not so in the us, where drug prices can vary greatly depending on a persons circumstances. thanks to the dysfunction of americas healthcare system, the price that grandpa pays for his cholesterol pills is determined by a host of factors, including whether he is insured, the quality of his insurance plan and the discounts pharmaceutical benefit managers can wrangle out of drugmakers.

Enter goodrx. founded in 2011, the company aims to do for prescription drugs what google flights has done for air travel. it has just raised $1.1bn in its initial public offering, giving it a valuation of nearly $12.7bn. it is a heady price, given that it was last valued at $2.8bn only two years ago.

Unlike other pharmacy start-ups such as capsule, or pillpack, which amazon acquired in 2018, goodrx does not actually sell drugs. its website simply allows users to find the best deals for their medication.the business makes money from its subscription services. it also gets a fee from pharmaceutical benefit managers when customers use its discount coupons at the pharmacy. goodrx made the move into virtual medicare with the acquisition of heydoctor last september.

It is a lucrative business. goodrx made a net profit of $66m on $388m of sales in 2019. it is on track to easily top that this year, having already pulled in $54m in profits in the first six months of 2020.

This puts goodrx on a multiple of nearly 116 times this years expected earnings. but then again, it is a frothy market. teledoc, the virtual healthcare company, boasts a market value of nearly $17.5bn and no profits.

Goodrx has thrived because of the lack of transparency in drug pricing in the us. sensible healthcare reform could change that. this may not be as far-fetched as it seems. in july, the us house of representatives passed legislation that would cap the amount that americans pay for health insurance and give the government power to negotiate prices with drug companies. while there is no chance the bill will pass in the republican-led senate, this could change if joe biden wins the white house in november.

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