They say there are markets for everything, but health care has historically been a tough one to navigate. Prices for services and drugs vary widely among providers, and it’s often impossible to know the final cost of a medication until the prescription has already been filled.
Brad Bangerter, a health insurance administrator turned entrepreneur, says he wants to change all that. This week, he launched a service called LowestMed, a smart phone app and a Web site that allow users to look up medications to find the cheapest price among nearby pharmacies.
Those who think all drugstores are created equal may be surprised to find that the prices often vary by hundreds of dollars because pharmacies negotiate their own rates with insurance and drug companies.
Bangerter says he discovered this fact a few years ago when he joined a high-deductible health plan, which stipulated that he’d be responsible for the bulk of his medical expenses out-of-pocket.
“I had no clue that there was such wide variation from one pharmacy to another,” he said. “One pharmacy sold the drug for over $100, and there was one for $5.”
Building the database of prices was tricky for Bangerter because pharmacies typically don’t disclose their prices so as not to reveal their negotiated rates to competitors. Some insurance companies allow members to search through pharmacies for drug prices, but these platforms can be cumbersome and incomplete.
To make his site, Bangerter partnered with a pharmacy benefit manager in order to get a list of the negotiated prices, and he bootstrapped his company from his home base in Salt Lake City.
LowestMed also comes with a free discount card, which Bangerter said can further reduce the price of a medication by between 10 and 85 percent.
Though it’s most useful to people who are without insurance or are on high-deductible plans, Bangerter said insured users might find that the discount card’s rate, combined with a quick search for the cheapest pharmacy, might be lower than their typical co-pay. Bangerter and his partner don’t make money when the app’s users buy the $4 or $5 generic drugs, but they do profit from the costlier meds that are purchased using the discount card.
“If they go to a store that has $4 or $5 generic cash prices, that’s okay with us,” he said. “We want consumers to know what the best prices are so that the next time they need a drug, they’ll find my site.”