We asked Mark Cuban how he’s going to disrupt Big Pharma. He said it’s pretty straightforward, actually.
Mark Cuban is on a mission to upend Big Pharma.
In early 2022, Cuban founded Cost Plus Drugs, a discount pill-mailing service that promised to take some of the bloat out of America’s pharmaceutical system by delivering drugs to consumers at lower, more transparent price points.
Here’s how it works: Cost Plus Drugs, as the name implies, gets drugs directly from manufacturers, cutting out the pharmaceutical middlemen and their extra costs. You pay a 15% markup to Cost Plus Drugs, plus a fixed $5 for labor on each medication and $5 for shipping.
Typically, drug pricing is clear as mud
Take Viagra, for example. How much will a name-brand, 30-day supply of the biggest dose of the “little blue pill” (100mg) cost you? Great question. It could be anywhere from around $2,000 to upwards of $3,000, without insurance. A generic form of the same 30-day supply might start somewhere around $250, but can also exceed $1,000.
Cost Plus tells consumers that it pays the manufacturer $3 for that same 30-day supply of 100mg generic Viagra tablets. It slaps on a 15% ($0.60) markup, plus $5 for “pharmacy labor” and voila: a 30-day supply of sildenafil citrate for $8.60 (plus shipping and taxes).
The company has over 2,000 drugs on offer this way, mainly generics. It’s everything from unbranded Crestor (about $6-7 a month, plus shipping) to silver burn cream for wounds (approximately $10-11 per tube). You can replace a trip to the pharmacy with a few minutes of computer time: create an online account, then connect with your doctor who’ll place your prescription order electronically.
Cuban, the veteran Shark Tank investor and billionaire part-owner of the Dallas Mavericks, isn’t necessarily expecting his mail-order pharmacy to make him millions of dollars richer. Rather, his goal with Cost Plus, he says, is to change the “game” of drug pricing.
“We are completely transparent, with the same price for anyone and everyone,” Cuban told B-17 via email. “We believe that when all data is transparent, then the market becomes efficient. At that point, prices will drop significantly.”
Importing $15 penicillin to compete with $500 shots from Pfizer is just the beginning
Cost Plus has been bullish about its ultimate ambitions to end the secretive, uneven world of US drug pricing altogether. And it’s increasingly stepping out of the generic world and going after big, brand-name drugmakers like Pfizer and Novo Nordisk.
Earlier this year, the company started up a manufacturing plant in Texas aimed at alleviating drug shortages, and this summer it inked an import deal with a Portuguese pharmaceutical brand to bring cheaper penicillin shots to clinicians in the US, who’ve been dealing with a surging nationwide syphilis outbreak that has completely cleaned out the US supply.
Normally, Pfizer is the only American manufacturer of the specific shot in question, called Bicillin L-A, but they’ve been in short supply on that medication for over a year. For now, the US Food and Drug Administration is allowing Cost Plus to import Portuguese penicillin to the US [$15], but only until Pfizer’s [~$500+] supply comes back out of shortage, likely in early 2025.
“We are going to try to do the same thing for any med that is in shortage where we feel we can save patients a material amount of money,” Cuban said. And he didn’t outright dismiss my idea that the same could be done in the future for chemotherapy medications, or GLP-1 weight loss shots like Wegovy, which have both been in severe shortages for many months.
“Where we can find a high-quality source that meets all regulatory requirements, we will do our best to import them,” he said.
1 regulatory change that would bring down healthcare costs across the board
Over the next decade, he expects Cost Plus to add more branded medications, and also move into “high-end specialty therapeutics.”
But he also acknowledged his strategy can only go so far, without firmer regulations, aimed at showing consumers what drugs actually cost to produce. If he had his way, Cuban says that every healthcare provider, pharmacy middleman, or “any affiliated in any way company” would be required to “publish their un-redacted contracts, for all to see.”
“Prices could drop 30% across all of healthcare in a year,” he said. “Transparency would end all the payment games.”
