Mark Cuban Pharmacy: Cost Plus Drug Makes Drug Costs Affordable
Thanks to billionaire Mark Cuban pharmacy venture, low-cost drugs are a reality. Cost Plus Drugs effectively offers generic medication at substantially discounted prices. In fact, transparent pricing is the heart of this business, challenging traditional pricing models.
Mark Cuban, the owner of the Dallas Mavericks and superstar in the TC show Shark Tank, is no pharmacist by any means. But Cuban told the Daily Show that he is clear about the long term goals, even if now he’s not making any money:
What’s happens is, when someone like me has started, or anybody has started a company like this, and they cut the cost of medications, what happens is that someone buys them, right?
One of the big companies buys them out and puts them away. So that takes them off the market. I can’t be bought. My next dollar isn’t gonna change my life, but if I get a change to f*ck up the pharmaceutical industry? – Mark Cuban
Table of Contents
The Problem of High Drug Costs in the U.S.
The high-price of prescription drugs is often linked to minimal competition among drug manufacturers. This allows companies to set prices without much market pressure. This creates a situation where a drug that cost $21 in 1999 could surge to over $300 by 2020 (Rajkumar, 2020). The monopoly of prescription drugs, therefore, contributes to unaffordable out-of-pocket costs for patients.
Inflation is another factor driving up prescription drug prices. As the inflation rate continues to rise, the healthcare industry is not immune to the consequences. Prices for common brand-name prescription drugs increase faster than inflation.
Economic Impact
Global spending on prescription drugs was $1.3 trillion in 2020, with the US alone spending $350 billion. These spending rates are projected to increase annually by 3-6% worldwide (Rajkumar, 2020). This growth in prescription drug spending has a significant impact on the economy, increasing healthcare costs nationwide.
Spending on prescription drugs in the US grew exponentially from $783 per capita in 2007 to $1,025 per capita in 2017. Projections indicate that it will continue to climb, potentially to $1,635 per capita by 2027. Unless something changes, there will be higher premiums, larger government spending on healthcare programs, and increased taxes.
Consumer Affordability
For consumers, high prescription drug prices are a challenge, with most increases happening in January or July every year (HHS). Patients are paying the consequences, particularly those without adequate insurance coverage, or no steady income.
Solutions and Government Interventions
The Inflation Reduction Act of 2022, for example, wants to lower prescription drug costs for people with Medicare. The law empowers the federal government to negotiate prices directly with manufacturers, ensuring lower costs for some of the most expensive prescription drugs.
Biosimilars, nearly identical molecules but less expensive, and competition have been key in driving prices down. Yet, the price of prescription drugs is often unapproachable for those with no insurance or alternative.
Mark Cuban’s Revolutionary Approach to Generic Drugs
Mark Cuban introduced a disruptive business model by establishing the Cuban Cost Plus Drug Company. His initiative is not just about profit, quite the opposite; it’s about ethical reform in a sector that can change health care.
The Genesis of Cost Plus Drug Company
The Cuban Cost Plus Drug Company was born to address the crazy costs of prescription medications, and to give access to generic drugs at a fraction of the normal price. The price is modeled to reflect the production plus operations expenses. This approach overcomes the hidden costs often associated with traditional pharmaceutical pricing structures.
The Mark Cuban Cost Plus Drug Company, PBC (MCCPDC) is fundamentally changing the way the pharmaceutical industry operates. As a public-benefit corporation (PBC), our social mission of improving public health is just as important as the bottom line. We’ve built a vertically-integrated supply chain to transparently charge a standard markup on every drug we sell. (https://www.markcubancostplusdrugcompany.com/)
Capitalizing on Transparency in Drug Pricing
Yet, transparency isn’t just about exposing costs. It’s also about setting a new standard in how businesses can operate by having consumers as priority. The drug imatinib, used to treat leukemia, is the example of how Cuban’s pricing model brings lifesaving medications to those who need it.
The list retail price of Imatinib is $2502. However, the brand-name version of Imatinib, Gleevec, can retail for as much as $9,657 per month. Even the generic version of Imatinib can range from $115 to over $5,500, according to GoodRx. The median price for the 100 mg dose was $442.32 and 400 mg at $1,480.29.
At Mark Cuban’s pharmacy, the cost of Imatinib for the 100 mg dose is $14.40 per month, and $47 per month for the 400 mg dose. That is thousands of dollars in savings !!
Imatinib is generally given until it stops working, according to Cancer Research UK. For example, in a study from the Medical University Innsbruck in Austria, 237 patients with leukemia received imatinib for up to 24 months. At full price, with a median of $1,480.29 per month, the total cost for 24 months is $35,526.96. At Cuban’s prices the total is $1,128. The total savings are a whooping $34,398.96 !!!!
How Mark Cuban Pharmacy Challenges the Pharmaceutical Industry
Cost Plus Drug Company challenges the traditional role of pharmacy benefit managers (PBMs). Cuban’s initiative cuts out the middleman, and opens a floodings of discounts on prescription drugs. The individuals who are going to benefit the most are those who are either uninsured, underinsured, or have insurance plans with high-deductible.
Cuban Cost Plus Drug Co uses accredited pharmacists to fill prescriptions thruogh HealthDyne and Truepill. There is no shortcut, and all drugs are sold following federal regulations from the Food and Drug Administration (FDA). There is no shortcut.
Cost Plus Model: A Breakdown of Mark Cuban Pharmacy’s Pricing
According to a September 2021 Gallup poll, 18 million Americans were unable to pay for at least one prescription medication due to ever-rising costs. And 1 in 10 Americans have skipped doses to save money.
Mark Cuban online pharmacy builds prices by adding a standard 15% markup for the cost of acquiring the drug, plus $3 for the cost of filling the prescription and $ 5 shipping fee. It also cuts out the costs from pharmaceutical middlemen, or PBM, who also adds to the drug price.
Many PBM contracts enable intermediaries to collect large margins on transactions through a practice known as spread pricing. In such arrangements, when a beneficiary fills a prescription, the PBM reimburses the pharmacy one price while charging health plans a higher price and pockets the difference or “spread.” Because neither the health plan nor the pharmacy knows what the other side was paid or charged, the practice hides the PBM’s margins from scrutiny. Jenesse Miller at USC Price
Strategic Partnerships: Expanding Access to Cost Plus Drugs
Mark Cuban’s pharmacy partners were picked to streamline accessibility and affordability of medications. These collaborations are examples of how strategic partners can provide substantial savings to end users.
- The collaboration between Rightway and Mark Cuban’s Cost Plus Drug Company was announced in September 2022. Rightway was the first PBM to join Cuban’s pharmacy venture in 2022 where they were able to cut costs and save money. Rightway experienced a 15% reduction in healthcare costs, and employers who use the Rightway PBM saw an average of 18% savings on pharmacy spendings.
- Capital Blue Cross is a health insurance company based in Pennsylvania, and the first health plan in the nation to work with Mark Cuban’s pharmacy. Since 2023, members can already access prescription medications through MCCPDC.
- Truepill and HealthDyne are mail-order pharmacies that partnered with MCCPDC to offer access to online low-cost medications.
- Binx Health is a digital health platform that aligns its online diagnostics testing with MCCPDC’s mail-order pharmacy products. This collaboration helps to improve access to healthcare services and medications for patients.
- Scripta Insights, a digital health company, integrated Mark Cuban pharmacy’s pricing into its platform, Med Mapper. This platform maps every drug on the market to every option for users to save money on their medications. Scripta also provides personalized reports that show alternative prescriptions through options like MCCPDC.
- Sidecar Health partnered with MCCPDC to address the issue of rising healthcare costs, often driven by a lack of transparency and inefficient middlemen costs. Together, they plan to shape a healthcare system that is transparent, consumer-friendly, and genuinely cost-effective.
- Mark Cuban’s pharmacy also partnered with Alto Pharmacy. Alto Pharmacy is a full-service digital pharmacy that has low-cost medications for delivery and pickup. Their service areas cover Los Angeles, Orange County, San Diego, Las Vegas, Denver, New York City, Houston, Dallas-Fort Worth, Austin, Sacramento and Santa Barbara. Team Cuban Card users can order medications for delivery with the Alto’s website or app.
- CVS pharmacies are also part of Cuban’s network. Under his new plan, pharmacies will be reimbursed based on the cost of the drug, a markup, a patient management fee and a flat fee pharmacy service.
Mark Cuban Pharmacy’s Online Experience
Cuban’s pharmacy’s website, at the time of writing (Jan 2024), offers discounted prices on a whooping 1180 medications. Right on the front page there is a smiley Cuban saying “Everyone should have safe, affordable medicines with transparent prices“.
The platform’s interface is intuitive, and guides you easily through registration, payments, and doctor choices.
My favorite section is the list of all medications. All 1180 medications are listed, alongside their cost, list price, and savings against market price. Summing up all the savings across all medications, the total savings add up to $306,719.30 !! The mean saving is $318, and, for the nerds, the median is $62. That means that most of the drugs sold by Mark Cuban’s pharmacy save you around $62.
Moreover, Cost Plus Drugs has partnerships with hundreds of pharmacies nationwide, all listed on their website. It is safe to assume that this list will only expand over time.
The Future of Prescriptions: Cost Plus Drug’s Expansion Plans
As negotiations with drug industry giants continue, there may be hope for a transformative wave in prescription drugs. The potential that Cuban’s direct-to-consumer venture is the future of all generic prescription drugs is a possibility.
Growth Strategy: Manufacturing and Distribution
Cuban’s company hints at the establishment of a new facility to produce generic drugs. The implications are immense, with a direct line to reduced costs and self-reliance in the drug distribution network. Such a maneuver would redesign the supply chain to rely on fair prices as the standard.
Mark Cuban made it clear he wants to add more name-brand drugs in all areas. Drugs like insulin are part of a test program that’s been already launched.
Cuban’s Mission: Big Pharma’s Watchdog and Advocate for Change
Mark Cuban, the billionaire entrepreneur and investor, has a mission solidified around one central theme: rewriting the narrative on prescription drug affordability within the United States. As an affordable prescription drug advocate, his tenacious spirit drives the campaign against the longstanding and leviathan practices of Big Pharma.
The aim is not only to alter how drugs are priced but also how they are distributed to the masses, ensuring that every individual has access to the healthcare they require without the financial strain that so often accompanies it.
A Crusade for Affordable Healthcare
Cost Plus Drug Company is revolutionizing healthcare, reforming medication pricing. With Mark Cuban pharmacy changing the prescription medicine landscape.
FAQ
Q: How do customers get reimbursed or put the cost towards their deductible when using Mark Cuban Pharmacy services?
A: Customers actually have two options: they can either use their insurance cards at the point of purchase or they can pay out of pocket via the website and be reimbursed. Either way, they can put the cost toward their deductible.
Q: What is the benefit of the 5 pharmacy service fee that Mark Cuban Pharmacy charges?
A: The $5 pharmacy service fee is a flat fee the company uses to cover operating costs. This fee allows Mark Cuban Pharmacy to provide lower medication costs to its customers.
Q: Does the pharmacy provide generic drugs?
A: Yes, the company sells generic drugs which are often significantly cheaper than their branded counterparts but are just as effective and safe to use.
Q: Can members of insurance companies like Cigna’s use their insurance cards at Mark Cuban Pharmacy?
A: No, the only insurances that are accepted as of Jan 2024 are AffirmedRx, Archimedes, Capital Blue Cross, Drexi, MedOne, Oread Rx, PCA Rx, Rightway, RxPreferred, SGRX, SmithRx, VIVIO, and other select prescription plans. However, Cigna started to move towards a model similar to Mark Cuban pharmacy, where they sell drugs at a much lower price.
Q: Where is Mark Cuban Pharmacy located?
A: Mark Cuban Pharmacy is located in Deep Ellum, a neighborhood in East Dallas, Texas.
Q: What savings could have been achieved if Mark Cuban Pharmacy was open during a particular period?
A: According to a report in the Annals of Internal Medicine, the use of this pharmacy model could have saved $2.6 billion if it was used during a particular test period.
Q: How are insurer Caremark reimbursements handled at Mark Cuban Pharmacy?
A: Mark Cuban Pharmacy allows, as of Jan 2024, AffirmedRx, Archimedes, Capital Blue Cross, Drexi, MedOne, Oread Rx, PCA Rx, Rightway, RxPreferred, SGRX, SmithRx, VIVIO, and other select prescription plans.
Q: Can people with prescription coverage through Express Scripts avail Mark Cuban Pharmacy services?
A: No, the only insurances that are accepted as of Jan 2024 are AffirmedRx, Archimedes, Capital Blue Cross, Drexi, MedOne, Oread Rx, PCA Rx, Rightway, RxPreferred, SGRX, SmithRx, VIVIO, and other select prescription plans. However, similarly to Cigna, Express Scripts will offer a system similar to Cost Plus Drug Company. The Express Script Clear Network aims to keep prices transparent.
Q: How much of prescription drug costs in the U.S do generic drugs account for?
A: According to a report by the Organization for Economic Cooperation and Development, generic drugs account for approximately 84% of the total prescription drug cost in the U.S.
Q: Is the concept of Mark Cuban Pharmacy related to “Shark Tank”?
A: Yes and no. Mark Cuban, a well-known investor on the “Shark Tank” TV program, launched this pharmacy thanks to his business acumen that we saw in the show. Yet, the business itself is not related to the show.
References
- Rajkumar, 2020. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7311400/
- https://www.managedhealthcareexecutive.com/view/mark-cuban-s-low-cost-pharmacy-is-making-deals-with-payers
- https://www.cnbc.com/2022/07/28/mark-cuban-pharmacy-cost-plus-drugs-struggling-with-brand-name-drugs.html
- https://time.com/6234570/mark-cuban-interview-cost-plus-drugs/
