The rising cost of healthcare in the United States is becoming a crisis. As the pandemic’s high demands and expensive healthcare needs meet the healthcare system’s inadequate resources and inflated pricing, Americans everywhere are feeling crushed in between. We’re in a pandemic that requires us to care for ourselves, but who can afford to? Mark Cuban, billionaire entrepreneur and owner of the Dallas Mavericks, believes he may have a solution.
Mark Cuban Cost Plus Drug Company
Cuban has just announced his solution: an online pharmacy that provides over one hundred affordable generic drugs that may be literal lifesavers for millions of Americans. The name? Well, it’s a mouthful – Mark Cuban Cost Plus Drug Company, or slightly less onerously called MCCPDC. With MCCPDC, Cuban cuts out the middleman. Instead of looking to the market to set exorbitant prices for drugs, Cuban’s model charges a flat 15% margin and pharmacist fee.
This online pharmacy model was created by Cuban and co-founder Alex Oshmyanksy, a radiologist. Between the two, they were fed-up with the overly complicated and inflated system of pharmacy-benefit managers who sit firmly between patients and their medications. These PBMs are the go-between for employers, health insurers, Medicare Part D and other prescription plans – and the drugs themselves. MCCPDC created its own PBM, which they promise will be “radically transparent” and aims to eliminate “spread pricing and misaligned rebate incentives”. The CPD PBM will offer savings to companies around the country which will incentivize them to join the system.
On the website, costplusdrugs.com, Cuban explains the company’s mission: “We started Mark Cuban Cost Plus Drug Company because every American should have access to safe, affordable medicines. If you don’t have insurance or have a high deductible plan, you know that even the most basic medications can cost a fortune. Many people are spending crazy amounts of money each month just to stay healthy. No American should have to suffer or worse – because they can’t afford basic prescription medications.”
The Rising Cost of Healthcare
Dallas Innovates explains, “As a registered pharmaceutical wholesaler, MCCPDC says it can ‘bypass middlemen and outrageous markups.’ It’s buying its drugs directly from generic drug manufacturers including Amneal Pharmaceuticals.
The pharmacy’s pricing reflects ‘actual manufacturer prices plus a flat 15% margin and pharmacist fee.’ How low can that make your drug prices? Mark Cuban Cost Plus offers three examples:
Imatinib, a leukemia treatment, retails for a staggering $9,657 per month. The lowest price with a common voucher is $120 per month. MCCPDC’s price: $47 per month.
Mesalamine, an ulcerative colitis treatment, retails for $940 per month. The lowest price with a common voucher is $102 per month. MCCPDC’s price: $32.40 per month.
Colchicine, a treatment for gout, retails for $182 per month. The lowest price with a common voucher is $32 per month. MCCPDC’s price is only $8.70 per month.”
It’s remarkable to see the difference in prices and that leads to the question: why are so many drugs that expensive?
CNBC explains, “In the past, pharmaceutical companies have attributed high prices to innovation, arguing that new and improved drugs are naturally more expensive. But a new study published in the journal Health Affairs complicates that idea.
It suggests that, largely, costs have gone up because companies are raising the price of drugs that are already available.
‘We found that, in the case of brand-name drugs, rising prices were driven by manufacturers increasing prices of medications that are already in the market rather than [by] the entry of new products,’ lead author Inmaculada Hernandez, an assistant professor at the University of Pittsburgh School of Pharmacy, tells CNBC Make It.”
Why? Because the system allows for it. In the United States, Congress has been hesitant to cap prices on medication in favor of letting the free market reign. The problem is that this isn’t shoes, or laptops – it’s life-saving medication. This is a problem Cuban’s pharmacy hopes to tackle, and by bringing more employers into the system, possibly reverse soaring healthcare costs from the patient on up.
Amazon and Others Strive to Compete – but For What Customers?
Cuban isn’t the only person looking to create their own pharmacy system and hoping to pass down savings. Amazon launched their own pharmacy in 2020 after a 2018 acquisition of PillPack, hoping to make the process of keeping up with medications both easy and cheap. The problem is, Amazon still uses a system similar to other pharmacies – which means the savings per customer vary wildly. So which customers are they looking to help save money? Cuban’s model will pass the savings on to everyone – helping the uninsured and insured alike. With at-cost plus only 15 percent, the drugs are as cheap as they can currently be found anywhere.
The Street writes, “Mark Cuban Cost Plus will be the latest competitor to take on online pharmacy market leaders Walgreens, CVS and Rite Aid. In 2020, Walgreens had the highest e-commerce net sales with $1.8 billion, trailed by CVS at $1.2 billion and Rite Aid with $199 million, according to Statista.
Global online pharmacy market in 2020 was estimated at over $68 billion, according to Facts and Factors.”
With more and more rumblings in Washington D.C. aimed at capping drug and healthcare costs, Cuban’s model may be ahead of a game other online pharmacies will have to play whether they like it or not.