Basketball billionaire enters the no-insurance, no-middleman drug business
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Mark Cuban, owner of the Dallas Mavericks, is getting into a business pioneered by independent pharmacists in Ohio and elsewhere. The idea is to radically reduce consumer costs for common generic drugs by cutting out insurance companies and the middlemen they hire to handle transactions with manufacturers and pharmacies.
On Jan. 19, the Mark Cuban Cost Plus Drug Company announced that it had launched its online pharmacy. Among the savings it touts, it’s offering the leukemia drug Imatinib for $47 a month. The list price of the drug is $9,657 a month and using vouchers from aggregators such as GoodRx, it goes for $120 a month, according to a statement announcing the launch.
“We will do whatever it takes to get affordable pharmaceuticals to patients,” Alex Oshmyansky, CEO of Cuban’s drug company, said in the statement. “The markup on potentially lifesaving drugs that people depend on is a problem that can’t be ignored. It is imperative that we take action and help expand access to these medications for those who need them most.”
While it’s making a bigger splash, Cuban’s venture in many ways mirrors work done by small, independent pharmacists such as Nate Hux. Frustrated with what he saw as outrageous markups and misaligned incentives, he started his Columbus-area Freedom Pharmacy in December 2020.
Insurers such as Aetna, Cigna, and UnitedHealth are increasingly combined with pharmacy middlemen — known as pharmacy benefit managers — such as CVS Caremark, Express Scripts and OptumRX. The corporations say they use their heft to negotiate big discounts from drugmakers and save money for consumers.
But Hux and many others say the companies work behind a veil of secrecy to raise prices and boost profits at consumer expense. By completely cutting out the insurance/PBM industry and charging cash, Hux and others say they’re able to offer generics at a steep discount — often even at a fraction of an insured customer’s copayment.
The cash prices at no-insurance pharmacies are much lower than cash prices non-insured customers pay for generic drugs at pharmacies that handle insurance. Last summer, Hux said that’s because pharmacies that take insurance have to charge more to make up for losses due to under-reimbursements from insurance/PBM transactions.
Hux’s Freedom Pharmacy — along with Blueberry Pharmacy in Pittsburgh and Medsavers Pharmacy in Austin, Texas — instead buy drugs on the wholesale market and mark them up by a fixed amount to cover their expenses. That way, customers enjoy the savings when drug prices drop after their patents expire.
“Most generic medications are less than a bottle of Tylenol,” Blueberry owner Kyle McCormick said last summer. “We don’t need to pay for insurance to cover a bottle of Tylenol.”
Similarly, Cuban’s online pharmacy is sourcing 100 generics from the wholesale market and marking them up by 15%. The transactions will be handled through the online healthcare company Truepill.
However, such computerized care would deny patients face-to-face interactions with a pharmacist — the health professional with which many patients are in the most frequent contact.
Hux said his major motivation for starting Freedom Pharmacy was to be paid to be a healthcare professional and not a mere bottle-filler.
“All of our profit comes from our services, like checking and vetting out the prescriptions, screening the doses,” he said. “I can tell you this: The things that you get paid for are what you become good at.”
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