Employers need to stop maximizing PBM drug plan rebates, says Mark Cuban

Employers should stop trying to maximize prescription drug plan rebates, because the main source of cash for rebates is sick employees, Mark Cuban said last week during a webinar organized by True Rx Health Strategists.

Cuban, the founder of the Mark Cuban Cost Plus Drug mail-order pharmacy, said drug plan rebates have little effect on the big pharmacy benefit managers’ revenue or the drugmakers’ revenue.

That means the main rebate funding mechanism is the worker with heart disease, or a child with cancer, who faces big prescription co-payment and deductible bills, Cuban said. “That person probably doesn’t have $1,500 sitting around,” Cuban said.

In some cases, Cuban said, a high drug plan deductible will push a patient away from filling a necessary prescription. “Do you really want to read that one of your employees died because you took a higher rebate?” Cuban asked.

Mark Cuban

Cuban, who may be best known as one of the sharks on “Shark Tank,” got his start in business as a personal computer software reseller and video streaming website pioneer. He later became one of the owners of the Dallas Mavericks basketball team.

In 2022, he launched Mark Cuban Cost Plus Drug. He said he’d try to shake up the U.S. prescription drug market by adopting an easy-to-understand prescription pricing strategy.

Related: Mark Cuban’s Cost Plus Drug Co. vows total transparency to shatter drug prices

Cost Plus prices drugs by adding a 15% markup to the wholesale price of a drug, a $3 pharmacy handling fee and a $5 shipping fee.

At press time, for example, Cost Plus was offering rosuvastatin, an anti-cholesterol drug, for $7.10 for 30 40 milligram pills.

GoodRx, a prescription price information website, showed major pharmacies selling the same amount of the same drug for prices ranging from $2, for special offers, up to $58.45.

The other side

Rohit Gupta, an analyst at Beghou Consulting, is one of the observers who say Cuban may be promising more savings than his company will be able to deliver.

“Cuban’s push for transparency is a positive one,” Gupta wrote in a recent commentary. But his company “is really nothing more than another pharmacy. It may not be able to secure the same level of volume discounts as vertically integrated competitors like CVS or Walgreens.”

The webinar

True Rx, an Indianapolis-based based pharmacy benefit manager owned by pharmacists, presented the webinar with Mark Cuban to promote its new relationship with Cost Plus. True Rx has added Cost Plus as an in-network mail-order pharmacy option.

Cuban emphasized during the webinar that his company wants to work with community pharmacies.

The big PBMs, which own their own mail-order pharmacies, have an incentive to steer business toward their own pharmacies, drive community pharmacies out of business, and then push up prices, Cuban said.

For an employer that cares about a local community, the threat the big PBMs pose to local pharmacies should be a reason to avoid using the big PBMs, Cuban said.

Another reason to work with companies like True Rx and Cost Plus is that they will provide plan prescription tracking data to employers as part of the basic service, Cuban said.

The big PBMs skimp on providing data, both to employers and to the drug manufacturers, Cuban said.

When the big PBMs do send data to employer plans, “they force companies to pay for their own information,” Cuban said. “That’s insane.”