How Does Blink Health Make Money

When I first saw a news segment on NBC Nightly News about Blink Health by Olivia Sterns last year about a startup company's efforts to bring down the cost of generic drugs I was intrigued. NBC reported that:

Consumer Advocates say this company's approach to insurance companies and patients' prescriptions could be the future.

However, Blink Health Has a Design Flaw and Its Members are Paying the Price - they guarantee it.

The woman featured in this story was taking expensive brands (Cymbalta was called out specifically for neck pain) and 'other' medications for high cholesterol and high blood pressure. I was astounded when they said this new company was offering drugs marked down by up to 95%* by basically bypassing insurance companies. The segment showed a graphic and the reporter explained how Blink Health works:

"Normally your doctor writes a prescription, you go to your insurance company, and the insurance company goes to the drug maker. Prices are based on whatkind of insurance you have".

This is where things went off the rail because that is NOT how pharmacy prescription claims are processed. This explanation cuts out the claim processor, the PBM.

The reporter then said, " Blink goes straight to the drug maker so you find your price, pay online, print off your receipt to take to your pharmacy." Again, I was fascinated by a new approach to buying medications. For me, this broke with the traditional model discount drug card companies like GoodRx, EasyDrugCard, and Familywize use to provide users discounts on drugs at local pharmacies.

Of course, the segment showed the woman's $422 monthly cost shrink down to just $77 by using Blink Health and ended with her "saving time and money and enjoying life's precious moments" (with her grand kids).

I had questions

How on earth do they negotiate prices from all the generic manufacturers for 1500 drugs and how does their payment model work? Like automobiles, consumers don't buy medications from manufactures. You can't go to Ford or Chevrolet directly to buy a car nor can you go to Pfizer or Novartis for drugs. So, what gives with Blink Health?

After checking prices at BlinkHealth.com, EasyDrugCard.com, and Familywize.org, I soon realized Blink's prices were not always lower than the others. They all use different PBMs so their prices vary. Blink uses MedImpact.

Blink is little more than another drug card with a twist in the payment model – but that twist has the potential of costing their members more money than the pharmacy's cash price. Unlike the others, Blink removes the 'lower-of' pricing methodology when processing the claim at the pharmacy.

Lower-of pricing compares the drug card's discounted price you expect to pay with the pharmacy's cash price so you only pay the lower of the two. Blink Health has designed this protective feature out of its business model.

Since Blink collects the payment from the member on their website, the members have a $0 copay when they pick up the drugs. The members pre-pay Blink so, even if the pharmacy's cash price is lower than the Blink price, the members have already paid the Blink price regardless. Blink Health is costing its members more money because they collect payment online before members go to the pharmacy instead ofat the pharmacy thus cutting out the opportunity of a lower pharmacy cash price during adjudication.

For example, Walmart publishes a list of $4 generics. On it, a 30-day supply (30 pills) of Allopurinol 300mg tablets cost just $4.

Blink Health's price for the exact same drug/strength/quantity is $16.83, the GoodRx price (the lowest price was Walgreens which does not accept Blink Health) is $10.35.

Using EasyDrugCard or Familywize, because they use 'lower-of" pricing, the user will only pay the lower-of price of $4 regardless of their advertised price. This happens automatically when the pharmacy sends the claim for adjudication to the PBM. In this scenario, these 2 companies will not earn a fee from the PBM because their cards did not produce a savings over the pharmacy's deeply discounted cash price of $4. This is the "lowest price guarantee" you lose when using Blink Health or GoodRx.

In this example, Blink Health just charged their member $12.83 more than if the member had not used their service at all. That's over 300% more than Walmart's cash price. When I spoke to Blink Health about a scenario like this they said the member would need to call their customer service number and ask for a refund. A refund? That's only IF the member knew they paid too much!

Unlike the aforementioned cards, 'lower-of' pricing does not happen automatically during adjudication so the member needs to rely on the pharmacist to tell them, which is exactly the scenario I recommend avoiding on my blog.

Blink Health's lack of lower-of pricing isn't just limited to the $4 generics. Its on every prescription. I'm not saying its members are paying more every time but moving the payment collection from the pharmacy to their website removes the lower-of logic from the process.

The NBC News segment showed the woman searching for coupons online. She said when she went to the pharmacy and they would 'run the code' from the coupon and said it wasn't real.

When I asked Blink Health how they are different from a discount drug card they said, unlike a discount drug card, their prices are guaranteed so the member pays the advertised price. Their members are paying the price alright.

With a company-reported $165 million of venture capital funding, I think Blink Health can afford to fix this flaw. But then again, why would they?

*Their 95% advertised savings is misleading.All prescription drug cards have the potential of saving like these however you do not get these savings on every prescription. That's the high-end of the savings potential. The reality is much less. Get informed about how these cards really work. I discuss deceptive marketing practices in part-2 of my in-depth post about prescription discount drug cards. These are available in video form on my YouTube channel as well.

About the Author

Christopher Petersen is a consumer advocate and subject matter expert on prescription discount drugs cards. In his 25-year career he worked at some of the nation's largest PBMs including Caremark, MedImpact, Envision RxOptions, and Medco (before it was acquired by ESI). Chris learned the details of the industry as a software engineer before transitioning to sales and account management. Visit his website at www.drugcardadvisor.com to learn about the industry, medication savings tips, and how to protect yourself and your identity when using discount drug cards.

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