From: allin
Mark Cuban has become significantly involved in the healthcare and pharmaceutical industries, particularly through his venture Cost Plus Drugs. He views this as his ultimate mission, aiming to make expensive healthcare affordable when people are sick [01:48:10].
Mark Cuban’s Involvement
Cuban initially started getting into healthcare when discussions about replacing the Affordable Care Act (ACA) arose [00:17:22]. He even created a concept called “the 10 plan,” designed as a means-tested ability to support healthcare [00:17:40]. During discussions with the Trump administration, he attempted to explain healthcare concepts, but they did not resonate [01:14:41].
He also provided ideas during the COVID-19 pandemic on backstopping bank and credit card accounts to prevent defaults [00:17:47]. He worked with Peter Navarro to find a company near Fort Worth to increase the output of PPE (Personal Protective Equipment), making a significant dent in PPE issues [00:18:01].
Cost Plus Drugs
Mark Cuban’s primary focus in healthcare is Cost Plus Drugs (costplusdrugs.com). The company’s model is to sell drugs at their actual cost, plus a 15% markup, a 5 shipping and handling fee for mail orders [01:37:00], [01:37:09], [01:37:11]. The goal is to highlight and rectify the issues of an opaque pharmaceutical industry [01:37:56].
Cuban’s motivation stemmed from an email from his co-founder, Dr. Alex Oshansky, who wanted to create a compounding pharmacy for drugs in short supply. Cuban pushed for a larger vision after observing the “Pharma Bro” scandal, where a drug’s price was unjustly inflated due to the industry’s opacity [01:41:25]. Pharmacy and healthcare contracts often contain clauses restricting discussion of pricing, contributing to this opacity [01:42:02], [01:42:07].
Cost Plus Drugs created and publicly releases a full price list for its 2,500 drugs, updated weekly, demonstrating how their costs often decrease [01:42:26], [01:42:31]. This transparency allows companies to compare prices, as their own Pharmacy Benefit Managers (PBMs) often conceal exact costs [01:42:41], [01:42:45].
Examples of Drug Price Discrepancies
- Tadalafil (Cialis generic): A 90-pack is about $9.90 through Cost Plus Drugs, less than the price of a bag of M&M’s [01:37:22], [01:37:29].
- Imatinib (chemotherapy drug): Retail prices can range from 2,000, while Cost Plus Drugs offers it for 30 [01:38:11], [01:38:27].
- Droxidopa: A medication that cost a friend 20 per month via Cost Plus Drugs, down from an initial $64 a month [01:38:37], [01:38:52].
Challenges and Impact
Cost Plus Drugs is currently losing money due to investments in a robotics-driven factory that manufactures sterile injectables in short supply [01:40:27], [01:40:33]. This factory can pivot to produce essential items like sterile water during crises [01:40:40].
The company is directly challenging the traditional industry, particularly Pharmacy Benefit Managers (PBMs) [01:41:07]. PBMs profit by skimming rebates from manufacturers, which they claim to pass on entirely to corporations, though they often use subsidiaries to take a cut [01:39:41], [01:39:45]. Cuban advises CEOs to audit their PBM contracts and insist on adding Cost Plus Drugs to their pharmacy supply, as PBMs will typically resist due to their significantly lower prices [01:40:01], [01:40:12].
Studies by institutions like Harvard Medical and Vanderbilt have used Cost Plus pricing data to compare it with what Medicare pays for the same drugs, highlighting the potential for significant savings [01:43:12], [01:43:21]. Cuban advocates for required transparency in all healthcare and pharmaceutical contracts to reduce out-of-pocket and government spending by 30-40% [01:44:09], [01:44:16].
Regulatory Environment
Mark Cuban has discussed the regulatory challenges faced by industries. He criticizes Gary Gensler, the head of the SEC (Securities and Exchange Commission), for using “regulation through litigation” [01:19:05], where lawsuits are filed in hopes that the outcome creates a new rule [01:19:11]. This approach makes it difficult for companies to understand and follow rules [01:18:03]. He believes it is essential to make it easy for businesses to comply with regulations [01:18:03].
FTC and PBMs
He praises the actions of Lena Khan and the Federal Trade Commission (FTC) for challenging Pharmacy Benefit Managers (PBMs) [00:53:45]. Cuban states that PBMs are “ripping off more companies and costing and increasing the cost of medications more than anything else that’s happening in healthcare” [00:54:27]. The FTC has called them out with a recent report and lawsuits [00:54:38].
Price Scalping
Cuban notes that price scalping exists in the pharmacy sector, and Cost Plus Drugs aims to provide an alternative [01:40:48], [01:40:56]. Kamala Harris has also frequently addressed the issue of price scalping [01:40:51].
Broader Economic and Regulatory Perspectives
Cuban believes that efficient government is crucial for economic growth. He had conversations with Kamala Harris’s team about using AI as a service to optimize processes, reduce friction in government, and improve efficiency without necessarily cutting many jobs [01:12:19], [01:12:20], [01:12:31]. The goal is to provide more value to citizens at less cost [01:12:48]. He emphasizes that technology is the ultimate driver of success, supporting new technologies like AI to ensure military dominance and economic growth [01:13:01], [01:13:10].
He contrasts this with a “slash and burn” approach to government, which he believes would trigger a recession due to mass unemployment and contract violations [01:14:01], [01:14:05]. He advocates for a problem-solving approach using technology to improve efficiency rather than an ideological, libertarian approach [01:14:49], [01:14:56].