What Mark Cuban Gets Right -- And Wrong -- About Low Cost Drugs
The Cuban model of good billionaire behavior will be studied for years to come
Mark Cuban is teaching a master class in how to be a “good billionaire.”
He’s taken to heart the insight between Nobel-prize winning economist (and Treasury Secretary Janet Yellen husband) George Akerloff’s "The Market for 'Lemons': Quality Uncertainty and the Market Mechanism."
Information asymmetries — this time in pharmaceutical products and how they get to patients — are driving up the cost of health care and thus inflation. It’s pretty amazing to look at this sort of thing.
Lots gets focused on Cuban’s political disses but these, too, are important.
He recently called Trump a “snakeoil salesperson” and said he’d support President Biden even if he was being given “last rites.”
I even like how politically correct it is. “Snake oil salesperson”? Is this politesse so as not to exclude Elizabeth Holmes (who weirdly is related to another medical fraudster)? I wonder…
It also shows that Cuban is the real deal as he pivots to Mark Cuban Cost Plus Drugs. The sixty-five year old Cuban only wants to do “Healthcare, healthcare, healthcare. It's the only company I've ever put my name on."
Every day the Boomers get older and they’ll need cheap drugs if they’re going to continue being with us as long as our recent presidents.
Cuban’s approach of undercutting the PBMs on drug prices is seemingly only having trouble keeping up with demand.
According to an industry website:
"We have got millions of scrips that we have delivered, probably a couple million patients now. I mean, our numbers, we're setting records almost every single week," he said.
Cost Plus Drugs currently offers about 2,500 generic medications, he noted. "The goal is to get every single drug we're legally allowed to sell. We have probably 10 different brand manufacturers that we're working with, but it's hard to add the brands because those big three PBMs are telling the brands, don't work with CostPlusDrugs.com. So that's our biggest challenge."
Cost Plus Drug Company works directly with drug manufacturers to bypass middlemen and lower prices. For consumers, the price of each drug includes a 15% markup as a profit margin, a $3 pharmacy handling fee and a $5 shipping fee. Cost Plus also transparently displays what it pays for its medicines.
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We're changing an industry, we're saving patients. I can give you example after example. A drug like Imatinib, where you might have to walk into a CVS and they will charge you $2,000 or $2,500, and, depending on the strength, you can get for $21 from Cost Plus Drugs. A drug like Droxidopa, same type of story, $10,000 for three months down to $30 a month from CostPlusDrugs.com. So I may not be making money yet. I will be. This will be self-sustaining, but the impact we're having is just incredible," Cuban said.
Cuban sold a stake in the Dallas Mavericks and this is reportedly his last season on “Shark Tank.” Here’s to hoping he can turn his foray into something long lasting.
And yet his approach is not a good enough answer to the problem.
Yes, PBMs are a problem. Yes, they do take advantage. My ex-wife, who was trained as a pharmacist, put it matter-of-factly. “I think PBMs are evil but I want to work for one.” OK then.
But most Americans wish they weren’t on any prescription drugs at all. Indeed only by mastering their genomics and making appropriate lifestyle changes and choices can they have a chance of avoiding pharma entirely.
Worse yet doctors routinely misprescribe drugs. “Adverse drug reactions” are the fourth leading cause of death in the United States ahead of pulmonary disease (before the COVID-19 pandemic), diabetes, AIDS, pneumonia, accidents, and automobile deaths. We don’t talk enough about iatrogenic harm.
We’ve written about this topic before and it’s worth repeating — pharmacogenomics — is a critical part of reducing costs in our health care system without compromising care.
This is why Traitwell — where I serve as CEO — has released an app — totally for free — which uses the drug-gene interactions provided by the Food and Drug Administration. The app works by taking 23andMe, AncestryDNA, and all the other consumer genomic sites and spitting back results.
We’re currently looking at locations for our genomics lab across the country. When that’s built we will be able to take anyone’s DNA and tell them what drug is right for them. This’ll be a revolution.
There are likely a lot more adverse drug-gene interactions in the population than just those listed by the FDA. We will only be able to find them if we enlist the public.
I call upon Mark Cuban to collect this genomic information as well as part of his new venture. You could even imagine a world where drugs get cheaper based upon more information you provide. What a blessing that would be for the public.
Traitwell will gladly build that app for Cuban. To some extent we’ve already begun on that project.
So Mark, have your people call my people. Or you could just reply to my emails.
Are you listening Peter Thiel and Marc Andreessen?