Mark Cuban has opened up an online pharmacy. It sells prescription drugs for much less than other providers. The goal of the company is to bring transparency to the drug pricing industry. In addition to that, the company wants to show consumers how much drugs actually cost wholesale.
To sum up, their strategy is to “bypass middlemen and outrageous markups,” according to a press release put out by the Mark Cuban Cost Plus Drug Company (MCCPDC).
The press release goes on to talk about how many of the prescription drugs they offer are vastly lower in cost. For example, prices for Imatinib are wildly lower from Mark Cuban’s company when compared to other pharmacies. Imatinib is a drug used to treat leukemia. It has a retail price of $9,657 per month. With a voucher, that price goes down to $120 per month. In contrast, MCCPDC offers the drug for only $47 per month. Mesalamine, an ulcerative colitis treatment, and Colchicine, a gout treatment, are other drugs that the company is offering for very cheap.
How Does the Mark Cuban Cost Plus Drug Company Work?
The prices that the MCCPDC offers almost seem too good to be true. However, they just cut out most of the middleman between consumers and pharmacies. For example, the company does not pay pharmacists, pharmacies, or pharmacy benefit managers. Typically, these roles would be key to drug distribution, as they all negotiate contracts within the industry.
In the past, pharmacy benefit managers have been criticized for the role they play in healthcare. They essentially stand in between pharmacies and their customers. In a normal pharmacy setting, the benefits manager would use wholesale buying power to negotiate rebates with drug manufacturers. They would then pass those rebates onto health insurers. They receive payment from that. Then, they pay pharmacies to dispense the drugs.
However, there’s not a lot of information on how this rebate relationship goes. USA Today reports that some incentives might be better than others. In that case, benefits managers could easily prefer more expensive drugs over cheaper alternatives. That higher cost almost always gets passed on to the consumer. The MCCPD addressed this in their press release. “There are numerous bad actors in the pharmaceutical supply chain preventing patients from getting affordable medicines,” the press release said.
The Affordable Drug Market Is Hard to Get Established In
Even though Mark Cuban is known for his business savvy, that doesn’t mean that this venture will work out long-term. In fact, he’s not even the first person to try something like this. The Mark Cuban Cost Plus Drug Company will directly have to compete with others like GoodRx. Plus, many people already have relationships with other pharmacies. Essentially, for Mark Cuban’s plan to work, he’s going to have to work really hard to reach a lot of customers.
The incentives are good for some drugs, but overall the price differences vary. “There’s nothing uniform about his market,” one healthcare scholar says. “It’s very hard to predict … whether the reduced out-of-pocket cost is enough.”