Mark Cuban’s Cost Plus Drugs Offers Prescription Medications at Huge Discounts

Billionaire entrepreneur Mark Cuban’s new pharmaceutical firm, which publicly launched in January, is promoting a whole bunch of generic, generally used medicines with completely huge price cuts. And I imply huge. 

The generic model of Actos — prescribed for sufferers with diabetes and usually bought for $74.40 at normal pharmacies — is out there for $5.40 for 30 tablets, in keeping with the web site. The generic model of Apriso — prescribed for sufferers with gastrointestinal illness and bought for $122.70 at normal pharmacies — goes for $36.60 for 30 tablets.

And that is only a snippet. The remedy ledger of the Mark Cuban Cost Plus Drug Company (sure, that is the complete identify) is lengthy. The medicine deal with situations starting from gentle migraines to acid reflux disorder to most cancers to neurological problems. Cost Plus Drugs additionally sells the generic variations of quite a lot of psychological well being medicines like Wellbutrin, used to deal with despair, and Adapin, typically prescribed for nervousness.

Overall, Cost Plus Drugs seems to function within the identify of combatting just a few very urgent public well being points within the United States. “If you do not have insurance coverage or have a excessive deductible plan, you recognize that even essentially the most fundamental medicines can break the bank,” Cuban mentioned within the firm’s mission assertion. 

“Every American ought to have entry to protected, reasonably priced medicines,” he provides, and “we additionally suppose that it’s simply as vital to introduce transparency to the pricing of medication so sufferers know they’re getting a good worth.”

With regard to the latter, the Cost Plus Drugs web site outlines exactly what you could be questioning proper now. How is it potential to slash drug costs? 

The mechanics of Cost Plus

Generally, it is fairly difficult how prescribed drugs — like Humira, meant for sufferers with Crohn’s Disease, or the EpiPen, employed to deal with extreme allergic reactions on-the-spot — are priced. 

There are a whole lot of shifting components behind-the-scenes, involving the drug firms themselves and insurers, to call simply two. But on the finish of the day, the price of remedy displays its demand. 

That means costs aren’t essentially dictated by what it took for drug producers to collect components and do the work to really make the remedy. And whereas the price of analysis is typically used to justify excessive costs, a 2016 examine discovered that “there isn’t a proof of an affiliation between analysis and improvement prices and costs; moderately, prescribed drugs are priced within the United States totally on the idea of what the market will bear.”

For occasion, EpiPen raised its worth by 500% between 2007 and 2016, although that is positively a extra excessive instance of such a change. 

Further, in comparison with world prescription drug costs, “there are lots of financial elements at work that lead the US to pay two-to-six occasions extra for prescribed drugs than different international locations,” John Clark, scientific affiliate professor on the College of Pharmacy and director of pharmacy providers at Michigan Medicine, mentioned in 2020. Those elements are additionally hidden inside the advanced ins and outs of drug manufacturing within the first place.

Cost Plus Drugs has fairly a unique method from the norm.

First, the corporate goals to take away all of the elusive complexities behind drug manufacturing. Second, it intends not to cost far more than manufacturing prices.

“Every product we promote is priced precisely the identical means,” Cuban mentioned within the mission assertion. “Our price plus 15%, plus the pharmacy charge, if any.” 

As an instance, Cost Plus Drugs’ price for albendazole, which treats tapeworms, is $26.08 per course, which is then marked up by 15% for firm prices to equal a complete of $30. Add on the pharmacy charge of $3 and also you get a grand complete of $33. That’s the ultimate worth, the corporate states, not together with delivery. 

And, per Cuban, the corporate additionally has a second technique of retaining prices as little as potential: Cost Plus Drugs does not intend to spend any cash on advertising, however moderately depend on word-of-mouth. 

“We began this firm as an effort to disrupt the drug business and to do our greatest to finish ridiculous drug costs,” he mentioned in his assertion.

Medicare may save billions

Like many specialists, Harvard Medical School researchers had been intrigued by this ultra-money-saving pharmaceutical endeavor — which is why they determined to quantify precisely how useful these low-cost medicine can be on a bigger scale. 

They performed a examine, revealed in June within the Annals of Internal Medicine, to calculate how a lot cash Medicare may have saved in a single 12 months if all of the generic medicine they supplied to sufferers got here from Cost Plus Drugs as a substitute of pharmaceutical firms with normal retail costs. 

In brief, billions. 

For 109 generic medicines bought by Cost Plus Drugs on Feb. 8 of this 12 months, the analysis crew recognized the value — together with pharmacy allotting and delivery charges — for the minimal and most portions out there to promote in bulk. Minimum amount referred to 30 depend, and most to 90 depend.

Then, the crew seemed up 2020 Medicare Part D spending for 89 of these 109 medicine. They overlooked 20 as a result of these had been those deemed incomparable to parallel, retail generic remedy at a close-enough diploma. 

After adjusting all collected costs to take away any confounding variables, like ingredient price between 2020 and 2022, the crew concluded that if Medicare bought generic medicine within the most amount equipped by Cost Plus Drugs, it may have saved $3.6 billion on 77 of 89 generic medicine in simply the 12 months 2020. If Medicare bought them within the minimal amount, it may have saved $1.7 billion on 42 of 89 of the medicine. 

The crew additionally mentioned it is a conservative estimate as a result of, since this evaluation, Cost Plus Drugs had added a bunch extra medicines. Nevertheless, the examine mentioned, “our findings recommend that Medicare is overpaying for a lot of generic medicine.”