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Pharm Exec Exclusive: Mark Cuban Talks Drug Pricing

Feature
Article
Pharmaceutical ExecutivePharmaceutical Executive: June 2024
Volume 44
Issue 6

Now more than two years into launching his alternative and transparent drug payment model, the longtime entrepreneur, in an interview with Pharm Exec, discusses the prescription drug cost landscape and shares his recipe for true disruption to the pharma pricing machine.

Photo credit: Christopher Willard/Disney General Entertainment Content via Getty Images

Photo credit: Christopher Willard/Disney General Entertainment Content via Getty Images

From his successful run as majority owner of the NBA's Dallas Mavericks to his time on the hit ABC series “Shark Tank,” billionaire businessman Mark Cuban is no stranger to making waves. But it was his bold entry into healthcare that may be the cause of a tidal wave that forever alters the cost of prescription drugs to the benefit of consumers.

Cuban’s direct-to-consumer (DTC) Cost Plus Drug Company, which does business as Cost Plus Drugs, launched in January 2022 with a transparent pricing model that professes to be easier on the patient and their wallet. Cuban’s foray into the healthcare arena was prompted by a singular goal that is succinctly posted on the homepage of the company’s website: “Everyone should have safe, affordable medicines with transparent prices.”

In an email interview with Pharmaceutical Executive, Cuban stated that overcoming the challenge in providing affordable prescription drugs to the masses ultimately stems back to many of the practices employed by pharmacy benefit managers (PBMs), which he said inhibits the impact of affordable options such as generic drugs and biosimilars.

“All of the issues lead back to how big PBMs do business,” Cuban said via email, referring to the likes of PBM stalwarts such as CVS Caremark, Express Scripts, and Optum Rx. “If companies start switching to smaller PBMs, all of this will be fixed. Controlling their own formularies will avoid this problem.”

Amid the attention cast by the Inflation Reduction Act and similar government efforts focused on pricing transparency, including several bills designed to curb PBM practices, Cuban added, “It’s less legislation and more companies understanding how all of this works and how it works against them.”

Offering mostly generics, Cost Plus Drugs employs a simple pricing model in which medicines are sold for a fully disclosed cost plus a 15% markup, a $5 pharmacy service fee, and a $5 shipping fee. The patient’s process is straightforward as well: create an account, find their drug, and ask their physician to send the prescription to their pharmacy partner. Cost Plus Drugs offers medications for 88 health conditions ranging from diabetes and erectile dysfunction to multiple sclerosis and hormone therapy. In total, there are 2,200 drugs available to sell directly to the company’s members.

One example on its website of the savings available through Cost Plus Drugs is that a 30-count, 400-mg supply of the branded chemotherapy drug Gleevec (imatinib) would come with a retail price of $9,657.30 through a regular pharmacy. Through Cost Plus Drugs, generic imatinib costs patients $34.70, for a savings of more than $9,600. Cost Plus Drugs also currently accepts prescription insurance for AffirmedRx, Archimedes, Capital Blue Cross, Drexi, MedOne, Oread Rx, PCA Rx, Rightway, RxPreferred, SGRX, SmithRx, VIVIO, and plans to add more soon.

On the technology front, RxLink announced last month that it will be incorporating Cost Plus Drugs into its platform that enables users (factoring in respective insurance, third-party discount cards, and manufacturer offers) to find and compare drug prices.

QUICK MOMENTUM

Cost Plus Drugs has grown significantly in popularity since its 2022 launch, despite reportedly not spending a single penny in marketing or advertising.

“We only do earned media. I use my platform to discuss what we are doing. I also speak at quite a few events,” Cuban said.

The company attracted particular notice in August 2023, when Blue Shield of California announced it would use Cost Plus Drugs and Amazon Pharmacy as the payer’s preferred pharmacy network for its 4.8 million members after having used CVS Health for the past 15 years. A month later, Salt Lake City-based Select Health, the insurance unit of Intermountain Health, and its PBM, Scripius, partnered with Cost Plus Drugs to provide their more than one million members direct access to Cuban’s service.

Following the growth of Cost Plus Drugs, PBMs such as Express Scripts and CVS have recently taken actions that are seemingly in response to the company’s transparent pricing model. CVS, late last year, unveiled multiple new programs with stated goals of delivering greater transparency, including CVS CostVantage, an overhauled pharmacy reimbursement model. The program defines cost on the amount CVS pays for a drug, a set markup, and a fee for pharmacy services, which the company says will limit the markup and service fee to customers. Meanwhile, Express Scripts launched ClearNetwork, which will use predictive acquisition cost, national average drug acquisition cost, or wholesale acquisition cost to project an individual drug’s price. The plan will add a flat pharmacy fee and a second fee of 15%, which the PBM said will be transparent to clients and pharmacies.

Cuban, however, noted that much remains to be seen regarding the impact of the PBM plans and whether they actually mirror the discounts offered by Cost Plus Drugs.

“The similarity ends at the name. They haven’t published their costs or pricing,” Cuban said.

Payers have announced similar-type pursuits. For instance, in 2023, UnitedHealth Group (via its Optum Rx pharmacy service) rolled out Price Edge, a price-matching tool akin to what Target and Best Buy use. And early this year, Elevance Health launched CarelonRx, a digital and home delivery pharmacy subsidiary.

Manufacturers have joined the act as well, having recently announced plans to expand their DTC offerings. Eli Lilly launched LillyDirect in January of this year, a DTC website offering access to 24 of their therapies across migraine, diabetes, and obesity, including the GLP-1 agonist Zepbound. LillyDirect facilitates access to medications by connecting patients with independent telehealth providers and other disease management resources, bypassing the need to obtain a prescription from a physician and then going to a pharmacy to fill it. Cuban stated these DTC models may represent the next wave in prescription drug access.

“I think it will be the standard,” he told Pharm Exec. “It’s an opportunity for manufacturers to become more responsive to patients and to better control their pricing.”

SHORTAGES AND SPECIALTY

As the demand for GLP-1 therapies has exploded, powered by dramatic weight loss results reported in clinical trials and in the real world by celebrity influencers, the result has been supply shortages that are expected to persist into next year. Cuban stated that Cost Plus Drugs is considering whether to begin offering GLP-1s.

“We have discussed it but have not made a decision yet,” he said.

The company recently built its own fill-and-finish facility in Texas, which will allow the manufacturing of its own medications to keep up with the rising volume and to help mitigate drug shortages. “We manufacture generic injectables that are on the short supply list,” Cuban said. “If we can do enough of it, we can expand our capacity.”

But even with its own manufacturing facility, keeping up with the demand and quality of service requires extra hands.

“We partner with a number of pharmacies, including HealthDyne and Truepill, to allow us to grow,” Cuban said. And the company’s recent partnership with Expion Health could potentially allow Cost Plus Drugs to address the ever-rising costs of specialty drugs, “by working together to make sure that patients get the best price on specialty medications,” he added.

FORMULA FOR FUTURE

Stakeholders in the pharmacy space have long raised the alarm on challenges related to PBM reimbursement rates for generic drugs and the difficulty to maintain profitability.

What’s needed to fully disrupt the impact of PBMs on drug pricing, Cuban said is, “That self-insured companies and states act in their own financial interests and in the wellness interest of their members by working with pass-through PBMs that allow them to get daily reports on their claims, control their formularies completely, control the [third-party administrator] rules, make sure that their local pharmacies are fully reimbursed, [and] control their network.

“These are all things that will allow companies and states to cut their costs considerably while having the data and control they need to improve the wellness of employees,” he continued.

As far as the immediate future, Cuban said Cost Plus Drugs has plans to expand its branded offerings.

“We are in discussions with every major manufacturer,” he told Pharm Exec. “We expect our brand portfolio to grow considerably this year.”

What about the long term? Cuban said he doesn’t look too far ahead.

“I focus on the next few months and continuing our mission to be able to add more and more brand drugs and to expand our retail network,” he said.

Group Managing Editor Michael Christel contributed to this report

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