Mark Cuban wants to lower the cost of drugs
Voicing his frustrations on the lack of transparency in the industry, Cuban believes the markup on common drugs is primarily due to PBMs seeking to turn over the maximum profit. Launched earlier this year, Cost Plus Drugs is based on a direct-to-consumer model where the company negotiates directly with manufacturers, effectively side-stepping PBMs.
One Twitter user wrote, “@CostPlusDrugs has been a lifesaver for many of my patients ... They no longer have to decide between taking necessary prescription and buying groceries.” Another user raves, “@costplusdrugs Zolmitriptan through Medicare $2,288 for two months - through CostPlusDrugs $32.40 per month. Thank you!”
While largely positive, the company has faced criticism of its offerings, particularly with the overwhelming emphasis on generic drugs over brand-name drugs. Brand-name drugs are marketed by pharmaceutical companies that own the patent to the drug. These companies are provided regulatory exclusivity from the FDA on a 20-year patent. During this time, the manufacturer can sell the drug at a high price to recoup and make a profit from their investment.
“[The] challenge is getting drug manufacturers to sell us,” Cuban points out. Because drug patents give companies exclusive selling rights, the manufacturers can sell these drugs at whatever price they want. And because PBMs are contractually obliged to share their earnings with insurance companies, drugmakers profit from their drug being on an insurance formulary. Pharmacies like Cost Plus Drugs, however, cannot offer formularies.
In a previous interview with CNBC Make It, Cuban conceded that Cost Plus Drugs is “actively working on the problem.” In the meantime, the company is continuing its mission “to turn the pharmaceutical industry upside down,” lessening the cost of life-saving generic drugs tenfold. Even cheaper medicine is expected from the company, as a manufacturing facility is being built in Dallas, Texas, towards the end of the year.
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