Taking on Pharma Mark Cuban, the billionaire entrepreneur and owner of the Dallas Mavericks, is intent on changing the American pharmaceutical industry’s playbook. He’s doing this both personally and through his company, Cost Plus Drugs. First announced in 2022, the initiative seeks to provide consumers with access to lower-cost medications. It aims to shine a light on the confusing, convoluted price matrix that has ruled the industry for decades. Cuban strongly contends that the current drug pricing model is evil and fundamentally broken. He hopes to shake things up by bypassing that model altogether, selling directly to consumers.
Cuban’s strategy is straightforward. Cost Plus Drugs calculates their prices based on the manufacturer’s price. Then, they mark that up by 15%, add on a pharmacy fee of $5 and shipping. This transparent approach contrasts sharply with the existing system where prices often reflect market demand rather than actual production costs. Cuban believes the absence of clear pricing is intentional. He thinks it’s designed to continue to blind consumers about what they are actually paying for their medications.
“The healthcare system is messed up,” Cuban said, reflecting his growing anger towards the status quo. He stresses the importance of taking a more straightforward and honest approach rooted in consumer welfare rather than protecting profit margins.
Cost Plus Drugs is directly addressing the issue of artificial shortages. Cuban argues that these shortages grossly over-inflate drug prices in the United States. He pointed out how critical medicines, such as pediatric cancer treatments as well as Pitocin, routinely experience shortages. These shortages are the product of manufacturers’ deliberate market machinations to drive up prices by restricting supply.
“Believe it or not, in this day and age, there are things like pediatric cancer drugs, Pitocin, sterile water, [and] this long list of drugs I can’t even pronounce right, that go in short supply because the manufacturers want them to go in short supply, because that’s how they jack up the price,” – Mark Cuban
Cuban sees Cost Plus Drugs as a means to do more than just reducing prices. He wants to open a first fully-robotic plant in Dallas. This exciting innovation will increase efficiencies tremendously and help to ensure that these life-saving medicines can be produced quickly and consistently. Cuban recognizes that speed is crucial in this industry, asserting, “When I started out, somebody told me this: ‘When you run with the elephants, there’s the quick and the dead.’ You’ve got to be quick, or you’re going to be dead, and so you’ve got to be lean, mean.”
In addition to online sales, Cost Plus Drugs offers consumers the option to pick up their medications at local pharmacies. This dual distribution model looks to solve accessibility issues and move the needle toward greater transparency in pricing.
Cuban’s approach is not without its challenges. Unsurprisingly, large corporate, foreign-owned pharmaceutical corporations and insurance carriers take center stage. They have fiercely opposed any reforms to their bilking business – er, models. Despite the naysayers shrouding his pipeline project, he’s not giving up. “Everybody was saying . . . you can’t fight these big companies, the insurance carriers, the PBMs,” he recounted.
Cuban’s commitment to making a profit while creating a positive impact on healthcare is evident through his ongoing efforts to refine and adapt his business model. He believes that by offering competitive pricing and transparent practices, Cost Plus Drugs can set a new standard for how medications are priced and sold in America.
“No one looks at the financial side of healthcare and says, ‘This is the way it should work,’” – Mark Cuban
His revolutionary vision is what’s gotten the public—and industry all-star judges—so worked up. They understand its ability to upend a market that has fought against change for decades. By putting cost-based pricing at the forefront rather than cost plus a healthy profit margin, which is typical market-based approach, Cuban is looking to change the conversation about drug affordability.