Mark Cuban is taking on Big Pharma, in a quest to help employers lower drug costs
As CEO of Cost Plus Drug Co., Mark Cuban is telling other CEOs: “If the big 3 PBMs, which also own the insurance companies, lose 5 of the top 15 non-PBM Fortune 50 companies, their business practices are going to change.”
Many people know Mark Cuban as one of the “sharks” on the ABC-TV show “Shark Tank” – and the colorful owner of the Dallas Mavericks basketball team. But he also is a successful entrepreneur who understands the importance of controlling costs.
“As a CEO, when I finally realized that my sickest employees were subsidizing this rebate check I was getting, it made me sick to my stomach,” Cuban said on the recent “Relentless Health Value” podcast. “And that’s what I’m here to tell CEOs of self-insured companies and CFOs and HR people.”
He started the Mark Cuban Cost Plus Drug Co. to disrupt the way the pharmaceutical industry operates. The company transparently charges a standard markup on every drug it sells. “Cost Plus Drugs comes along, and you can see what you should be paying for all these different medications, and people are just stunned at how they’re being overcharged,” he said.
In August, Cuban’s company announced a collaboration with Scripta Insights, a health-care IT and data analytics company focused on lowering prescription drug costs. Ferrin Williams, Scripta Insights’ chief pharmacy officer, agrees with the need to increase transparency and enhance the customer experience.
“In most industries, competition drives pricing,” Ferrin Williams, chief pharmacy officer at Scripta Insights, said. “But in our industry, the competition happens as pharmacy benefit managers make their formularies, so they’re negotiating with the manufacturers, who sometimes pay 60% to 80% in rebates just to be listed on the formulary.”
Consumers often find themselves rolling the dice with their health.
“Members are used to spending seven minutes or less with their doctor, getting an electronic script sent to their nearest pharmacy (which is likely a mega-chain) and then having that casino-like experience where they get to the pharmacy hoping that they’re going to be able to afford the drug. If they can, they’ll pick it up; and if they can’t, they don’t get it.”
Related: Satisfaction with PBMs sinks to lowest point in 10 years, study finds
“I mean, this industry is so, so simple,” Cuban said. “If these companies just act in their own best financial and employee interest, they can simplify this very quickly, because if the big three PBMs [Caremark, owned by CVS Express Scripts, owned by Cigna; and Optum Rx, owned by UnitedHealth Group], which also own the insurance companies, lose five of the top 15 non-PBM Fortune 50 companies, their business practices are going to change.”