What’s Next for Cost Plus Drugs, the Game Changing Mark Cuban Pharmacy?

This Tuesday (8/16), President Biden signed the Inflation Reduction Act into law. Among other things, the bill will allow Medicare to negotiate drug prices directly for the first time. This is an important step forward for a country suffocated by high medical costs. But it only covers a very limited range of drugs.

For everything else, there’s Mark Cuban. The Shark Tank mogul launched Cost Plus Drugs earlier this year. They’re already taking the pharmaceutical world by storm with their deep discounts on prescription drugs.

Hang on, how did Mark Cuban start a pharmacy?

Among the 250 richest Americans, Cuban cut his teeth on software resale and system integration. Not very sexy, but you can’t buy the Dallas Mavericks without breaking a few eggs.

Cuban’s business ventures have ranged far and wide, which makes it difficult to truly answer the question, “What does Mark Cuban do?” While he currently invests in over a dozen healthcare companies, he seems particularly passionate about Cost Plus. In fact, the formal name of the company is Mark Cuban Cost Plus Drug Pharmacy.

How did it all start? In 2018, Cuban got a cold email from Cost Plus’ now-CEO, Dr. Alex Oshmyansky. Oshmyansky impressed Cuban with his pitch for offering prescription drugs at dramatically-slashed prices. After cutting through all the red tape involved in creating a new pharmacy, Cuban and Oshmyansky launched Cost Plus early this year.

How does Cost Plus Drugs work?

Just for one example, consider the leukemia drug imatinib. At retail prices, the life-saving medicine can cost upwards of $10,000 a month. Common insurance co-pays can slash that price down to under $150. At Cost Plus, imatinib costs $39.

How do they do it? The name “Cost Plus” refers to their cost-plus pricing model. Each price consists of the cost to produce it, a 15% markup, and a $3 pharmacy labor charge.

In the US, drug prices are typically negotiated through pharmacy benefit managers. They work on behalf of insurers and are sometimes cited as the reason for our astronomical prices. In fact, a 2016 study concluded that the single primary factor affecting drug prices is “how much the market will bear.”

Cost Plus cuts out the middleman, working directly with generic drug manufacturers to set prices. This comes with its own challenges, however. Name-brand drugs are the primary source of high medical costs, and they don’t deal in discounts unless they’re getting something out of it.

The other disadvantage is that Cost Plus can’t accept insurance. To be fair, the discounts they offer are typically much less than what patients can get with insurance. But if you’re thinking of buying into Mark Cuban’s pharmacy, it’s an important distinction.

What’s next for the Cost Plus pharmacy?

While Cost Plus’ scope is currently limited, it’s already making a huge difference. One Chicago doctor says her patient has saved $1,000 a month with Cost Plus, and other success stories have been making headlines.

On a PBS podcast, Mark Cuban said his pharmacy is already in talks with a number of name-brand providers. They hope to have over 2,000 drugs available by the end of the year. The easiest way for Cost Plus to attract big names is with a large user base, and their audience seems to be growing each day.

Later this year, Cost Plus plans to streamline their process even further by manufacturing their own drugs. Their factory in Dallas, Texas is expected to open later this year, hopefully allowing for even steeper discounts.

How big could it be?

Cost Plus is already changing lives. But if Mark Cuban hopes to be single-handed savior of the world (and in a way, all billionaires do), he’s got a long way to go.

For one thing, the primary factor making pharmaceutical prices so high is name-brand drugs. While Cost Plus hopes to court these companies with a large user base, companies don’t have much incentive to change course.

As Cost Plus grows, if they’re truly committed to change, their next stop may be Capitol Hill. A recent study found that Medicare could have saved $3.6 billion in 2020 alone if they had sourced drugs through Cost Plus. In response to this, Mark Cuban sent a tweet encouraging major political figures to get in touch.

I don’t need to be the one to tell you that the U.S. healthcare industry is fucked beyond belief. Cost Plus hasn’t ushered in a utopia in seven short months, but it’s done what it set out to do: shake the table.

In Cost Plus’ mission statement, Mark Cuban writes, “We started this company as an effort to disrupt the drug industry and to do our best to end ridiculous drug prices.” While the road ahead won’t be easy, they’ve certainly done a commendable job so far.