Billionaire Mark Cuban’s Solution To a Big Problem in America
Some have tried it but they fell flat on their face.
It is as if the pharmaceutical industry, and more particularly, drug prices were an unbreakable juggernaut.
In 2018, JPMorgan Chase and its CEO Jamie Dimon, Amazon (AMZN) – Get Free Report and its founder Jeff Bezos, and legendary investor Warren Buffett joined forces to shake up this industry. Given the three names involved and their influence, it was expected that something would change in favor of consumers, who often find themselves strangled by colossal drug bills.
Their goal was to bring down the exorbitant cost of health care in the United States, by offering affordable health coverage to their employees initially, and subsequently expand it to all Americans.
The announcement came in the midst of a debate on the explosion of drug prices in the United States and multiple but unsuccessful efforts by Congress to bring down drug prices.
U.S. health care spending grew 2.7 percent in 2021, reaching $4.3 trillion or $12,914 per person, according to the Centers for Medicare & Medicaid Services (CMS). As a share of the nation’s Gross Domestic Product, health spending amounted to 18.3 percent. Despite a recurring debate and a will, for several years, to limit the costs, health care expenses and drugs prices continue to soar.
CostPlus Drug
But after three years, the venture collapsed: health care was too big a problem.
This January, Mark Cuban co-founded CostPlus Drug Company, an online pharmacy. This pharmacy is the only one of his businesses that bears his name. The exact name is Mark Cuban CostPlus Drug Company.
“It’s the only company I have ever put my name on,” the billionaire, 64, told TheStreet last October. “I wanted drug manufacturers, providers, patients to know that I truly care and am committed to making this work.”
CostPlus Drug Company “fills and delivers prescriptions at cost plus a fixed 15{1668a97e7bfe6d80c144078b89af180f360665b4ea188e6054b2f93f7302966b} margin,” the company says on its website.
For example, a 30-count supply of 100mg Imatinib, a drug which treats leukemia and other types of cancer, will cost you $14.40 the firm says on its website. The retail price at other companies is $2,502.60. You save $2,488.20.
For people with type 2 diabetes, one tablet of Metformin, the generic of Fortamet, will cost you $46.20 if purchased from CostPlus Drug. This will save you $518.27, the company claims, because the retail price is $564.47. The medication helps to control high blood sugar.
Cuban is able to provide these prices because there’s no middleperson. CostPlus Drug Company bypasses health-insurers and negotiates directly with drug manufacturers.
“In 2020 alone, Medicare could have spent $3.6 billion less on generic acid-reflux, cancer and other drugs if purchased through Cost Plus Drug Company, a new online pharmacy backed by Mark Cuban,” found a study from Harvard Medical School researchers.
The company’s business model may also be beneficial for health insurers, including Medicare, which spent an estimated $115.6 billion on prescription drugs last year, or nearly a third of the total U.S. drug spending, the study added.
‘Trust Business’
In less than a year, Cost’s success exploded. Comments from consumers and physicians promoting the company on social media abound.
“I am fortunate enough to have excellent insurance but @costplusdrugs has cut my prescription cost by 2/3rds,” hailed a Twitter user on December 21. “My husband’s prescription for his meds dropped to $30 for 90 days versus $100 for a 30 days. We are now saving over $1200 a year. Thank you for this service!”
Another Twitter user was equally thankful: “I just received my first order from costplusdrugs! I are saving me a bundle! My husband just ordered three months of his prescription that was going to cost $49 at Walgreens with his insurance and the same drug from you is $7.50, thank Mark!!!”
“@costplusdrugs just placed my first order. My phosphorus binder that I have to take 9 to 15 pills a day would normally be without insurance almost 1000.00 dollars for 90 days, even with insurance it was going to b near 300.00 with @costplusdrugs. It was 183 shipped to my door,” said another Twitter user.
But how does Cuban explain his success, when others have failed? The Dallas Mavericks owner just gave away the secret in response to a question posed to him by a Twitter user.
“@mcuban what business is @costplusdrugs in?” asked the user on December 21.”@costplusdrugs, We are in the Trust Business,” the billionaire responded. “We buy drugs, we sell drugs. We show our actual cost, margin and fees so you can Trust we are offering the best price we can.”
He added: “Trust & Transparency are in short supply in Healthcare. It’s our unique advantage.”
In October, Cuban told TheStreet that the goal of the company was to be “the low cost provider of every medication we can make available for sale and to be as completely transparent as possible,”
“That will allow us to keep adding customers and continue to grow,” he said.
He also explained that there are “many issues” in the pharmaceutical industry that transparency can solve. And he made a decision to address all these issues which end up ruining consumers.