Mark Cuban Takes On Big Pharma
June 20, 2022 10:38 AM Subscribe
Mark Cuban has set up a new venture - a "cost plus" pharmacy, in order to fight back against rising drug costs.
The concept, as laid out in this Good Housekeeping story on the service, is simple - the pharmacy service buys generics at cost, adds a 15% surcharge (in an industry where 100+% is normal) and a reasonable shipping and handling fee. The resulting drops in prices are amazing as people have seen their prescription costs be cut in half or more.
The concept, as laid out in this Good Housekeeping story on the service, is simple - the pharmacy service buys generics at cost, adds a 15% surcharge (in an industry where 100+% is normal) and a reasonable shipping and handling fee. The resulting drops in prices are amazing as people have seen their prescription costs be cut in half or more.
It is worth pointing out the two big criticisms of the venture. First, there's the fact that the service doesn't take insurance - apparently this is due to the contracts that insurers use that would muck with the "cost plus" model. The other is that their formulary is limited, though they are sourcing more and more generics as time goes on.
posted by NoxAeternum at 10:43 AM on June 20, 2022 [15 favorites]
posted by NoxAeternum at 10:43 AM on June 20, 2022 [15 favorites]
As a member of big pharma (and I know we have plenty to apologize for), I want to point out that he's primarily taking on the middlemen in this particular venture. Those 100% markups he's eliminating happen after it's out of pharma's hands. I suppose it might take some money from pharma if it gets more people to pick the generic version of off-patent drugs, but that'd be pretty minor.
Either way it all seems a net benefit to society.
posted by mark k at 10:44 AM on June 20, 2022 [51 favorites]
Either way it all seems a net benefit to society.
posted by mark k at 10:44 AM on June 20, 2022 [51 favorites]
(Thanks mark k, that's a really useful clarification for efforts to put this into context.)
posted by BlueBlueElectricBlue at 10:47 AM on June 20, 2022 [6 favorites]
posted by BlueBlueElectricBlue at 10:47 AM on June 20, 2022 [6 favorites]
Cost Plus is organized as a "public-benefits corporation" in Texas, which is interesting (as is this recent PR push, given that it's been open for months). Right now, the company partners with online pharmacy Truepill, and import the drugs, but are expected to complete their own 22,000 square foot "state of the art" manufacturing plant (does anyone build outlandishly outdated facilities??) in Dallas by the end of this year.
As of last October, Cuban was also starting a pharmacy-benefit management company, to tandem with Cost Plus? In this archived WSJ article:
Mr. Cuban’s PBM will start bidding for clients next year and aims to be operational in 2023, said Dr. Oshmyansky, the CEO [of Cost Plus]. The company will share details of its operating costs to clients and will share 100% of the rebates they receive from drugmakers, he said.
posted by Iris Gambol at 10:55 AM on June 20, 2022 [2 favorites]
As of last October, Cuban was also starting a pharmacy-benefit management company, to tandem with Cost Plus? In this archived WSJ article:
Mr. Cuban’s PBM will start bidding for clients next year and aims to be operational in 2023, said Dr. Oshmyansky, the CEO [of Cost Plus]. The company will share details of its operating costs to clients and will share 100% of the rebates they receive from drugmakers, he said.
posted by Iris Gambol at 10:55 AM on June 20, 2022 [2 favorites]
The key element here is "no insurance". The US medical insurance industry has gotten deeply twisted up with profiting off of pharmaceutical drug sales. The PBM industry is also to blame, and insurers get into very close business deals with PBMs. Many insurers greatly privilege their own in-house pharmacy. My insurer Blue Shield of CA, for instance,
I take a couple of ordinary prescription medicines. I've long since given up buying them with insurance. I'm now using Amazon Pharmacy, which can bill insurance but typically charges a higher price if I buy it that way. GoodRx is also very helpful in establishing prices for drugs. They act as their own PBM and those coupon codes they give you end up with a kickback to them. But it still gives transparent pricing and often good pricing.
The Durable Medical Equipment market is equally fucked, btw. DMEs are medical devices you buy with a prescription; mine is a CPAP machine. Buying it on insurance results in a 50% markup, an ongoing predatory relationship with a middleman, and an extra ongoing hassle with my insurance company.
(Apologiges or perhaps envy for our non-American Metafilter members. We are so captive to private health costs and the health insurance industry in the US we can't even imagine a better way.)
posted by Nelson at 11:19 AM on June 20, 2022 [18 favorites]
I take a couple of ordinary prescription medicines. I've long since given up buying them with insurance. I'm now using Amazon Pharmacy, which can bill insurance but typically charges a higher price if I buy it that way. GoodRx is also very helpful in establishing prices for drugs. They act as their own PBM and those coupon codes they give you end up with a kickback to them. But it still gives transparent pricing and often good pricing.
The Durable Medical Equipment market is equally fucked, btw. DMEs are medical devices you buy with a prescription; mine is a CPAP machine. Buying it on insurance results in a 50% markup, an ongoing predatory relationship with a middleman, and an extra ongoing hassle with my insurance company.
(Apologiges or perhaps envy for our non-American Metafilter members. We are so captive to private health costs and the health insurance industry in the US we can't even imagine a better way.)
posted by Nelson at 11:19 AM on June 20, 2022 [18 favorites]
I was just thinking last night about brokers and middlemen. Like, I don't have a problem with them kicking manufacturers and distributors in the teeth and making their profit from that. I'd rather see savings go to the consumer, but I find the schadenfreude to be sufficient. Indeed, that was the advertised purpose of PBMs at the beginning.
However, they have since turned into their own cartel that in the vast majority of cases only increase the costs to the ultimate customer. Combine that with their stupid rules that they say are to help keep cost down that really just add more red tape, justify higher prices to handle all the unnecessary paperwork, and restrict the choice of which seller you can buy from and it makes me fucking furious.
posted by wierdo at 11:25 AM on June 20, 2022 [2 favorites]
However, they have since turned into their own cartel that in the vast majority of cases only increase the costs to the ultimate customer. Combine that with their stupid rules that they say are to help keep cost down that really just add more red tape, justify higher prices to handle all the unnecessary paperwork, and restrict the choice of which seller you can buy from and it makes me fucking furious.
posted by wierdo at 11:25 AM on June 20, 2022 [2 favorites]
It is worth pointing out the two big criticisms of the venture.
My criticism is that Mark Cuban gets a profit and good publicity.
posted by Faint of Butt at 11:28 AM on June 20, 2022 [13 favorites]
My criticism is that Mark Cuban gets a profit and good publicity.
posted by Faint of Butt at 11:28 AM on June 20, 2022 [13 favorites]
This is something states should be doing on their own. There is no reason we should have to hope for the charity of someone like Mark Cuban. If the state of Virginia can operate ABC stores; it should be able to operate pharmacies that provide affordable medications to its residents. There is also no reason a large state can manage its own insulin and epipen production lines on a cost plus basis.
posted by interogative mood at 11:47 AM on June 20, 2022 [41 favorites]
posted by interogative mood at 11:47 AM on June 20, 2022 [41 favorites]
Related news from last week: FTC Launches Inquiry Into Prescription Drug Middlemen Industry: Agency to Scrutinize the Impact of Vertically Integrated Pharmacy Benefit Managers on the Access and Affordability of Medicine
I am so looking forward to laughing in the faces of every single human being involved in the existence of "CVS Caremark Pharmacy Benefits Management" when they are exposed as the fraud they are. It's time for them all to have to go find real jobs ASAP.
posted by hydropsyche at 11:51 AM on June 20, 2022 [11 favorites]
I am so looking forward to laughing in the faces of every single human being involved in the existence of "CVS Caremark Pharmacy Benefits Management" when they are exposed as the fraud they are. It's time for them all to have to go find real jobs ASAP.
posted by hydropsyche at 11:51 AM on June 20, 2022 [11 favorites]
CVS Caremark is the worst; they're the mail order pharmacy that Blue Shield of CA strongly encourages its customers to use, presumably because of some profitable arrangement. They are also the only mail order pharmacy that Blue Shield will allow me to get a 90 day supply from. How that's legal I do not understand.
The pricing i got from CVS Caremark wasn't so bad, but then again I'm taking cheap drugs. Somehow every single order they could never tell me what the insurance price would be until after my order was shipped. (Amazon does better, often displaying the insurance price and sometimes requiring 24 hours to get it, although that sometimes fails).
But mostly Caremark just has absolutely awful customer service. The website is pretty much entirely broken. It took me 3 months to get my first order filled, half of which took hand holding from some high level support person who was very competent but not empowered. Every single time I tried to log into the site and place an order I faced some new technical problem. Amazon Pharmacy is not great but at least they can implement a website correctly.
posted by Nelson at 12:03 PM on June 20, 2022 [6 favorites]
The pricing i got from CVS Caremark wasn't so bad, but then again I'm taking cheap drugs. Somehow every single order they could never tell me what the insurance price would be until after my order was shipped. (Amazon does better, often displaying the insurance price and sometimes requiring 24 hours to get it, although that sometimes fails).
But mostly Caremark just has absolutely awful customer service. The website is pretty much entirely broken. It took me 3 months to get my first order filled, half of which took hand holding from some high level support person who was very competent but not empowered. Every single time I tried to log into the site and place an order I faced some new technical problem. Amazon Pharmacy is not great but at least they can implement a website correctly.
posted by Nelson at 12:03 PM on June 20, 2022 [6 favorites]
CVS Caremark is the worst
I switched to my husband's health insurance specifically so that I would not have to use Caremark. They messed up 3 prescriptions of mine and blamed the doctors. But, it was three different doctors, so I didn't buy it. Then they started messing with my birth control prescriptions, requiring a signature on them sometimes. I explained I can't be home to sign for the package because I am at work - you know at the job that forces me to use them. They told me I have to argue with UPS about it. Walgreens has their own issues, but at least I can get to one in under 30 minutes and talk to someone.
They are also the only mail order pharmacy that Blue Shield will allow me to get a 90 day supply from. How that's legal I do not understand.
I agree that is some kind of anti-competitive BS. We had the same policy.
So I know Cuban isn't some kind of hero, but this seems like a move in the right direction.
posted by soelo at 12:48 PM on June 20, 2022 [6 favorites]
I switched to my husband's health insurance specifically so that I would not have to use Caremark. They messed up 3 prescriptions of mine and blamed the doctors. But, it was three different doctors, so I didn't buy it. Then they started messing with my birth control prescriptions, requiring a signature on them sometimes. I explained I can't be home to sign for the package because I am at work - you know at the job that forces me to use them. They told me I have to argue with UPS about it. Walgreens has their own issues, but at least I can get to one in under 30 minutes and talk to someone.
They are also the only mail order pharmacy that Blue Shield will allow me to get a 90 day supply from. How that's legal I do not understand.
I agree that is some kind of anti-competitive BS. We had the same policy.
So I know Cuban isn't some kind of hero, but this seems like a move in the right direction.
posted by soelo at 12:48 PM on June 20, 2022 [6 favorites]
it [a state] should be able to operate pharmacies that provide affordable medications to its residents. There is also no reason a large state can manage its own insulin and epipen production lines on a cost plus basis.
But that is a Band-Aid over a problem created by a pathological need by some to avoid "Socialism" and will fail because it's still socialism.
posted by Mitheral at 12:54 PM on June 20, 2022 [2 favorites]
But that is a Band-Aid over a problem created by a pathological need by some to avoid "Socialism" and will fail because it's still socialism.
posted by Mitheral at 12:54 PM on June 20, 2022 [2 favorites]
More power to him. I am going through an ear infection that has led to three prescriptions, one of which, a Cipro compound for ear drops, cost me $146 Saturday at a Rite-Aid pharmacy, even with insurance. After I got home, I saw the drug listed from anywhere from $45 to $80 online.
Another, a Z-pack, cost me $7 and change. Somewhere between the pharmacy and my house, it disappeared from the bag (I actually think the very confused acting counter clerk never put it in the bag with the wads of papers and two other prescriptions.) It took a day and a half to get it replaced and would have cost me $49 because I was replacing it too soon, but the pharmacist took pity on me and found a Good RX code, and instead, it cost me $9 something. None of this makes any sense to me and while I'm hardly rich, if I were really poor, I would have been completely out of luck. This has to change.
Cuban has grown on me over the years, and he makes a lot of sense.
posted by etaoin at 1:51 PM on June 20, 2022 [4 favorites]
Another, a Z-pack, cost me $7 and change. Somewhere between the pharmacy and my house, it disappeared from the bag (I actually think the very confused acting counter clerk never put it in the bag with the wads of papers and two other prescriptions.) It took a day and a half to get it replaced and would have cost me $49 because I was replacing it too soon, but the pharmacist took pity on me and found a Good RX code, and instead, it cost me $9 something. None of this makes any sense to me and while I'm hardly rich, if I were really poor, I would have been completely out of luck. This has to change.
Cuban has grown on me over the years, and he makes a lot of sense.
posted by etaoin at 1:51 PM on June 20, 2022 [4 favorites]
For people like me for whom this is sincerely the first time we've ever heard of Mark Cuban - what reason might we have previously had to dislike him?
posted by EmpressCallipygos at 1:57 PM on June 20, 2022 [3 favorites]
posted by EmpressCallipygos at 1:57 PM on June 20, 2022 [3 favorites]
Besides Shark Tank? For one thing, What you shouldn't forget about Mark Cuban's role in Mavericks sexual harassment scandal (Dallas Morning News, Sept. 19, 2018)
TL:DR Three bad actors perpetrated nearly all of it, the first internal investigation was in 1998, but when it all hit the news, the current team owner -- Cuban -- pleaded obliviousness, despite plenty of flags.
posted by Iris Gambol at 2:13 PM on June 20, 2022 [3 favorites]
TL:DR Three bad actors perpetrated nearly all of it, the first internal investigation was in 1998, but when it all hit the news, the current team owner -- Cuban -- pleaded obliviousness, despite plenty of flags.
posted by Iris Gambol at 2:13 PM on June 20, 2022 [3 favorites]
...I...don't know what Shark Tank is either.
I'm ill equipped, I fear, I'll shut up now.
posted by EmpressCallipygos at 2:18 PM on June 20, 2022 [3 favorites]
I'm ill equipped, I fear, I'll shut up now.
posted by EmpressCallipygos at 2:18 PM on June 20, 2022 [3 favorites]
Shark Tank is a show where people pitch inventions and business ideas to a group of rich jerks, hoping that one of the rich jerks will agree that their idea/product is potentially a moneymaker and will invest in it. Known as "Dragon's Den" in the UK.
posted by Pope Guilty at 2:21 PM on June 20, 2022 [4 favorites]
posted by Pope Guilty at 2:21 PM on June 20, 2022 [4 favorites]
For people like me for whom this is sincerely the first time we've ever heard of Mark Cuban - what reason might we have previously had to dislike him?
He owns the Dallas Mavericks and the organization has had numerous sexual assault allegations against people working in the front office. Cuban has called opposing teams' players "thugs" and is just generally kind of an asshole- arguing with referees (most owners aren't involved in games to this extent, they leave arguing to players and coaches), getting fined for saying his team should "tank", tried to get everyone to boo a former Mavericks player when he played for another team, and is pretty much a bad sport.
He also thought about running for president in 2020 as an independent, because he's that kind of jackass billionaire.
(For whatever reason google is not loading for me so I have no citations.)
posted by oneirodynia at 2:56 PM on June 20, 2022 [3 favorites]
He owns the Dallas Mavericks and the organization has had numerous sexual assault allegations against people working in the front office. Cuban has called opposing teams' players "thugs" and is just generally kind of an asshole- arguing with referees (most owners aren't involved in games to this extent, they leave arguing to players and coaches), getting fined for saying his team should "tank", tried to get everyone to boo a former Mavericks player when he played for another team, and is pretty much a bad sport.
He also thought about running for president in 2020 as an independent, because he's that kind of jackass billionaire.
(For whatever reason google is not loading for me so I have no citations.)
posted by oneirodynia at 2:56 PM on June 20, 2022 [3 favorites]
I'm not that familiar with him, but I imagine "he's a billionaire; but not the worst kind of billionaire?" is a kind of damning with faint praise I guess.
I have seen him on Shark Tank, though, and a reason this project doesn't surprise me is that whenever the pitch is for a snake-oil, unfounded medical claims product - supplement / Ozone Water / 'activated almonds' whatever, he almost universally calls the person out with an immediate "I Pass. Not only do I pass, but your product is bad and you should be ashamed."
But in cynical Business Guy terms, the prospect of "I can sell an essential good, make a guaranteed 15% profit, and people will praise me for it? I'm in!" is an easy sell for someone who owns an NBA team.
Add to the fact that the market he's 'disrupting' is doing exactly the same thing - online pharmacy - but with a minimum 300% profit...
The 'we don't take insurance, because it's insurance-industry pricing controls that are the problem in the first place' deal makes sense. These products are cheaper if you just pay cash; the trick is that you have to buy a million bucks worth.
He's got a million bucks in cash handy, so he's leveraging that. Buy for $0.85, sell for $1.00 is still competitive against Corporate Insurance Pharmacy pricing; which is produce for $.85, sell to insurer at $12.50, insured patient pays 'discounted' rate of $4.
posted by bartleby at 3:15 PM on June 20, 2022 [14 favorites]
I have seen him on Shark Tank, though, and a reason this project doesn't surprise me is that whenever the pitch is for a snake-oil, unfounded medical claims product - supplement / Ozone Water / 'activated almonds' whatever, he almost universally calls the person out with an immediate "I Pass. Not only do I pass, but your product is bad and you should be ashamed."
But in cynical Business Guy terms, the prospect of "I can sell an essential good, make a guaranteed 15% profit, and people will praise me for it? I'm in!" is an easy sell for someone who owns an NBA team.
Add to the fact that the market he's 'disrupting' is doing exactly the same thing - online pharmacy - but with a minimum 300% profit...
The 'we don't take insurance, because it's insurance-industry pricing controls that are the problem in the first place' deal makes sense. These products are cheaper if you just pay cash; the trick is that you have to buy a million bucks worth.
He's got a million bucks in cash handy, so he's leveraging that. Buy for $0.85, sell for $1.00 is still competitive against Corporate Insurance Pharmacy pricing; which is produce for $.85, sell to insurer at $12.50, insured patient pays 'discounted' rate of $4.
posted by bartleby at 3:15 PM on June 20, 2022 [14 favorites]
For sixteen years, Wal-mart has been offering $4 generics (source) but I think it's being used as a loss-leader to get people into stores. But it's been around for so long it doesn't make headlines, and Walmart is looked down upon. Target was doing something similar until their pharmacy division was acquired by CVS (source) in 2016.
I suppose this is the first time where it's done by mail order but also it's clear that even as these prices, it's a profit-making venture.
posted by meowzilla at 3:44 PM on June 20, 2022 [1 favorite]
I suppose this is the first time where it's done by mail order but also it's clear that even as these prices, it's a profit-making venture.
posted by meowzilla at 3:44 PM on June 20, 2022 [1 favorite]
For people like me for whom this is sincerely the first time we've ever heard of Mark Cuban
…
I...don't know what Shark Tank is either.
I dunno how you managed this (either one, really), but whatever it is you’re doing: keep doing it.
posted by Ryvar at 6:17 PM on June 20, 2022 [27 favorites]
…
I...don't know what Shark Tank is either.
I dunno how you managed this (either one, really), but whatever it is you’re doing: keep doing it.
posted by Ryvar at 6:17 PM on June 20, 2022 [27 favorites]
So I looked into it and the only thing that sorta slowed me down was how much more involved it seems like my PCP (or my PCP's office, let's be honest) needed to be with my pharmacy? I mean, I'm not paying a lot at the moment - $50 every 3 months, but this would save me $40 of that, but the current process is basically "you still going to the Walgreens at x street and y avenue? great, we'll send any new prescriptions over there" and that's about the end of it until Walgreens texts, phones, emails and sends an app notification to tell me my prescription is ready for pickup. Usually all four at the same time.
I mean, that's easy. Is this actually any worse, or does it just sort of sound vaguely fuzzy, but only in the same way that getting your lens prescription to Warby Parker is a slight speedbump on the way to a pair of $130 glasses?
posted by Kyol at 7:03 PM on June 20, 2022 [1 favorite]
I mean, that's easy. Is this actually any worse, or does it just sort of sound vaguely fuzzy, but only in the same way that getting your lens prescription to Warby Parker is a slight speedbump on the way to a pair of $130 glasses?
posted by Kyol at 7:03 PM on June 20, 2022 [1 favorite]
Walmart's $4 generic program has a much more limited formulary. To their credit the included drugs are (in general) the most common prescriptions, so it does have a greater impact than the size of the list might suggest.
What I find more interesting/useful than the cost plus model and resultant lower prices is the price transparency. One of the reasons healthcare in the US is so hopelessly fucked is that there is little to no price transparency. It's literally impossible to shop around. Nobody can argue with a straight face that free market capitalism is a good system for provisioning care, but it is also true that things are much worse than they have to be simply because the mechanisms that make it tolerable or even useful in some cases have been explicitly kneecapped in this particular sector.
posted by wierdo at 7:13 PM on June 20, 2022 [9 favorites]
What I find more interesting/useful than the cost plus model and resultant lower prices is the price transparency. One of the reasons healthcare in the US is so hopelessly fucked is that there is little to no price transparency. It's literally impossible to shop around. Nobody can argue with a straight face that free market capitalism is a good system for provisioning care, but it is also true that things are much worse than they have to be simply because the mechanisms that make it tolerable or even useful in some cases have been explicitly kneecapped in this particular sector.
posted by wierdo at 7:13 PM on June 20, 2022 [9 favorites]
> First, there's the fact that the service doesn't take insurance
I have switched almost all my prescriptions over to them, because even without insurance the price is still lower. It also reduces paperwork and red tape annoyance substantially, because you never fall into the trap of insurance covering vs. not covering something, and then having to do that whole little dance of trying to get something approved.
> the charity of someone like Mark Cuban
Every time I switch a med over to them I find myself saying some kind word about a jackass billionaire, which is definitely very out of character for me. But I just switched another med over to them today - it was previously around $2.50 per pill, about $1/pill with GoodRX (which is good, but also a pain in the @$$ to deal with every.single.time you go to CVS or whatever to pickup some little prescription), and with Cost Plus it is about 15 cents per pill, including shipping.
The only good thing I can say about Mark Cuban's involvement is that sticking his name on it probably amounts to a bunch of free marketing. Sort of like how Tesla doesn't have a marketing department or even a spokesperson but just has Musk's Twitter account instead.
(FWIW this is the only actual social utility I have ever been able to discover for billionaires. It probably amounts to about $100K/year in actual utility, so we should pay them that and confiscate all the rest of their assets for the common good.)
> The PBM industry is also to blame, and insurers get into very close business deals with PBMs
If you live in the U.S. and don't know what a Pharmacy Benefits Manager (PBM) is, you probably ought to spend 5 minutes finding out and then the remainder of your lifetime focusing your hatred and outrage in their direction.
The basic problem is not the idea of having a benefits manager for pharmaceuticals. The problem is in the details of how they work.
In short, the PBM and the insurance company negotiate drug costs and other details extensively. A hugely important part of these negotiations are kickbacks (yes, literal KICKBACKS, the type of business practice that would be a felony in literally any other business) that the insurance company will get if they produce $X number of sales of certain drugs.
So this practice massively distorts the PRICE of the drugs the insurance company will pay, WHICH DRUGS will even be available to you as part of your insurance company's drug formulary, and more important to you, which drugs will be available to you, the customer, at WHICH COPAY AMOUNT.
This whole system is the major reason you, or anyone else, has no real idea who much an individual drug prescription costs. The real cost isn't known until the quarter or year is complete, the insurance company and PBM have finished totally their drug sales for the year, and the appropriate kickbacks have been paid for the various drugs purchased.
Of course, the amount of the of the kickback varies according to how much of a particular drug is delivered. The whole point is to drive the sales of the particular drugs that profit the PBM the most, so if you hit your sales targets for those specific drugs then you are going to make more.
If this all sounds like a completely illegal kickback and anti-competitive scheme, it is because it either is that or should be.
FWIW Flug Spouse was tangentially involved in working on the software side of a Fortune 5 health services company, on some of the software used to calculate these kickbacks. The whole thing was astonishingly complex, and helped answer the question of both why prescription drugs are so overpriced in general, and why no one can give you a straight answer as to how much any of the drugs actually cost.
Literally, neither the insurance company nor the PBM could say what the actual cost of any particular prescription was, until all the accounts for their entire contract had been settled for the entire year.
posted by flug at 8:46 PM on June 20, 2022 [16 favorites]
I have switched almost all my prescriptions over to them, because even without insurance the price is still lower. It also reduces paperwork and red tape annoyance substantially, because you never fall into the trap of insurance covering vs. not covering something, and then having to do that whole little dance of trying to get something approved.
> the charity of someone like Mark Cuban
Every time I switch a med over to them I find myself saying some kind word about a jackass billionaire, which is definitely very out of character for me. But I just switched another med over to them today - it was previously around $2.50 per pill, about $1/pill with GoodRX (which is good, but also a pain in the @$$ to deal with every.single.time you go to CVS or whatever to pickup some little prescription), and with Cost Plus it is about 15 cents per pill, including shipping.
The only good thing I can say about Mark Cuban's involvement is that sticking his name on it probably amounts to a bunch of free marketing. Sort of like how Tesla doesn't have a marketing department or even a spokesperson but just has Musk's Twitter account instead.
(FWIW this is the only actual social utility I have ever been able to discover for billionaires. It probably amounts to about $100K/year in actual utility, so we should pay them that and confiscate all the rest of their assets for the common good.)
> The PBM industry is also to blame, and insurers get into very close business deals with PBMs
If you live in the U.S. and don't know what a Pharmacy Benefits Manager (PBM) is, you probably ought to spend 5 minutes finding out and then the remainder of your lifetime focusing your hatred and outrage in their direction.
The basic problem is not the idea of having a benefits manager for pharmaceuticals. The problem is in the details of how they work.
In short, the PBM and the insurance company negotiate drug costs and other details extensively. A hugely important part of these negotiations are kickbacks (yes, literal KICKBACKS, the type of business practice that would be a felony in literally any other business) that the insurance company will get if they produce $X number of sales of certain drugs.
So this practice massively distorts the PRICE of the drugs the insurance company will pay, WHICH DRUGS will even be available to you as part of your insurance company's drug formulary, and more important to you, which drugs will be available to you, the customer, at WHICH COPAY AMOUNT.
This whole system is the major reason you, or anyone else, has no real idea who much an individual drug prescription costs. The real cost isn't known until the quarter or year is complete, the insurance company and PBM have finished totally their drug sales for the year, and the appropriate kickbacks have been paid for the various drugs purchased.
Of course, the amount of the of the kickback varies according to how much of a particular drug is delivered. The whole point is to drive the sales of the particular drugs that profit the PBM the most, so if you hit your sales targets for those specific drugs then you are going to make more.
If this all sounds like a completely illegal kickback and anti-competitive scheme, it is because it either is that or should be.
FWIW Flug Spouse was tangentially involved in working on the software side of a Fortune 5 health services company, on some of the software used to calculate these kickbacks. The whole thing was astonishingly complex, and helped answer the question of both why prescription drugs are so overpriced in general, and why no one can give you a straight answer as to how much any of the drugs actually cost.
Literally, neither the insurance company nor the PBM could say what the actual cost of any particular prescription was, until all the accounts for their entire contract had been settled for the entire year.
posted by flug at 8:46 PM on June 20, 2022 [16 favorites]
“Medicare could have saved up to $3.6 billion in 2020 if it bought 77 generic drugs at prices by Mark Cuban's costplusdrugs prices”
The article is paywalled but posted on Twitter by one of the authors here
posted by rajbot at 11:01 PM on June 20, 2022 [2 favorites]
The article is paywalled but posted on Twitter by one of the authors here
posted by rajbot at 11:01 PM on June 20, 2022 [2 favorites]
GoodRX (which is good, but also a pain in the @$$ to deal with every.single.time you go to CVS or whatever to pickup some little prescription)
I've been stuck with this for one prescription, and it gets so old. I don't mind having to price-shop for it once, but I resent having to go through the process repeatedly.
posted by Dip Flash at 5:53 AM on June 21, 2022 [2 favorites]
I've been stuck with this for one prescription, and it gets so old. I don't mind having to price-shop for it once, but I resent having to go through the process repeatedly.
posted by Dip Flash at 5:53 AM on June 21, 2022 [2 favorites]
Everything flug says about PBMs is right on target, and it's also true of durable medical goods benefit managers, which do the same stuff for medical equipment. I briefly worked for one (indirectly) that specialized in equipment and supplies used by hospitals. So they acted like a middleman between Giant Hospital Operating Companies and Giant Medical Device Manufacturers.
What struck me as weird was that you wouldn't think that these giant companies, each with their own purchasing, logistics, supply-chain management departments, would really need some middleman to do their negotiating for them. I mean: getting the materials you need seems like a core business function, no? Like if I ran a steel plant, I'd probably have someone on payroll whose job it is to make sure we have enough iron ore, and who keeps tabs on the price of iron ore, etc. etc., and yet here these hospitals are, basically outsourcing this seemingly-important business function to a bunch of chucklefucks in Texas with no medical background at all, who were able to afford an entire high-rise office tower outfitted like a mockery of a Silicon Valley startup, doing nothing else.
I'd worked in some weird niche industries as a consultant before, so it's not totally unusual to not grasp a company's business model on first glance. But I'd never seen an entire organization of that size that just plainly shouldn't exist. And not, like, in an ideal world, where we wouldn't have any need for the military-industrial complex or intellectual property attorneys, but under capitalism they shouldn't be there. The whole thing felt very Potemkin-village-y, like if I went to the wrong floor and walked into the wrong room, I'd find out that the whole thing was an elaborate front for the CIA and the Mexican cartels to launder money. Because at least that would have made some fucking sense.
> The real cost isn't known until the quarter or year is complete, the insurance company and PBM have finished totally their drug sales for the year, and the appropriate kickbacks have been paid for the various drugs purchased.
This is kinda-sorta true. The benefits managers have enough information to deduce the cost, though. Again, I'm really only familiar with durable medical, but I suspect the same thing is roughly true of PBM: the Benefits Management Company (BMC) gets a price list from the manufacturer with all their products, the list price, and the "rebate" (kickback) terms—the rebate being dependent on the client's "total spend" with that manufacturer (or distributor) that year, sometimes in total or sometimes within certain product categories. Someone at the BMC gets access to the hospital's purchasing records for the preceding few years, plus hopefully some idea of predicted change in demand, and they run the numbers, basically doing hypotheticals like "if you switched from glove brand X to glove brand Y, giving you more total spend with brand Y's owner, getting you into the next-highest rebate tranche, you'd save $Z per year".
The BMC takes its cut from the rebate flowing to the hospital co, on terms individually negotiated with that particular hospital corporation. In order to poach a hospital from a competing BMC, they might offer one percentage on rebate dollars under a threshold, and then take a higher percentage on rebate dollars above that. (E.g. "we'll give you as good a deal as your existing BMC, and we'll only take X% more of what additional rebate we can get for you".)
All this data, incidentally, is sent around by email (or sometimes uploaded into web portals) as Excel files. At least when I was there, there wasn't a hint of EDI or anything particularly slick about these companies, operationally.
If you really wanted to disrupt the industry, I suspect that it wouldn't take that much money—not Mark Cuban money, certainly—to encourage one of the sorry-ass analysts at a BMC to 'accidentally' leave their company laptop in a Starbucks for a couple hours, and publish the results. Let everyone see what everyone else is paying, and by extension what they're being screwed on. Let patients see how much profit is built-in to their "cost share" and "co-pay". We're not talking about state secrets here. These companies probably leak all sorts of data accidentally through sheer incompetence, so who knows what could be gotten out of them with some actual effort.
posted by Kadin2048 at 8:23 AM on June 21, 2022 [3 favorites]
What struck me as weird was that you wouldn't think that these giant companies, each with their own purchasing, logistics, supply-chain management departments, would really need some middleman to do their negotiating for them. I mean: getting the materials you need seems like a core business function, no? Like if I ran a steel plant, I'd probably have someone on payroll whose job it is to make sure we have enough iron ore, and who keeps tabs on the price of iron ore, etc. etc., and yet here these hospitals are, basically outsourcing this seemingly-important business function to a bunch of chucklefucks in Texas with no medical background at all, who were able to afford an entire high-rise office tower outfitted like a mockery of a Silicon Valley startup, doing nothing else.
I'd worked in some weird niche industries as a consultant before, so it's not totally unusual to not grasp a company's business model on first glance. But I'd never seen an entire organization of that size that just plainly shouldn't exist. And not, like, in an ideal world, where we wouldn't have any need for the military-industrial complex or intellectual property attorneys, but under capitalism they shouldn't be there. The whole thing felt very Potemkin-village-y, like if I went to the wrong floor and walked into the wrong room, I'd find out that the whole thing was an elaborate front for the CIA and the Mexican cartels to launder money. Because at least that would have made some fucking sense.
> The real cost isn't known until the quarter or year is complete, the insurance company and PBM have finished totally their drug sales for the year, and the appropriate kickbacks have been paid for the various drugs purchased.
This is kinda-sorta true. The benefits managers have enough information to deduce the cost, though. Again, I'm really only familiar with durable medical, but I suspect the same thing is roughly true of PBM: the Benefits Management Company (BMC) gets a price list from the manufacturer with all their products, the list price, and the "rebate" (kickback) terms—the rebate being dependent on the client's "total spend" with that manufacturer (or distributor) that year, sometimes in total or sometimes within certain product categories. Someone at the BMC gets access to the hospital's purchasing records for the preceding few years, plus hopefully some idea of predicted change in demand, and they run the numbers, basically doing hypotheticals like "if you switched from glove brand X to glove brand Y, giving you more total spend with brand Y's owner, getting you into the next-highest rebate tranche, you'd save $Z per year".
The BMC takes its cut from the rebate flowing to the hospital co, on terms individually negotiated with that particular hospital corporation. In order to poach a hospital from a competing BMC, they might offer one percentage on rebate dollars under a threshold, and then take a higher percentage on rebate dollars above that. (E.g. "we'll give you as good a deal as your existing BMC, and we'll only take X% more of what additional rebate we can get for you".)
All this data, incidentally, is sent around by email (or sometimes uploaded into web portals) as Excel files. At least when I was there, there wasn't a hint of EDI or anything particularly slick about these companies, operationally.
If you really wanted to disrupt the industry, I suspect that it wouldn't take that much money—not Mark Cuban money, certainly—to encourage one of the sorry-ass analysts at a BMC to 'accidentally' leave their company laptop in a Starbucks for a couple hours, and publish the results. Let everyone see what everyone else is paying, and by extension what they're being screwed on. Let patients see how much profit is built-in to their "cost share" and "co-pay". We're not talking about state secrets here. These companies probably leak all sorts of data accidentally through sheer incompetence, so who knows what could be gotten out of them with some actual effort.
posted by Kadin2048 at 8:23 AM on June 21, 2022 [3 favorites]
I've been stuck with this for one prescription, and it gets so old. I don't mind having to price-shop for it once, but I resent having to go through the process repeatedly.
I'm not sure if this is what you are referring to or how I made it work, but I use GoodRx at Walgreens for my dog's medication, and they have my GoodRx account in their system and it's automatically applied every time I get a medication for her. I see it on the pharmacy printout as "your insurance saved you $x.xx". (She's been through a rough year including misdiagnosed not-actually-cancer and not-actually-autoimmune disorder, and is on permanent kidney and heart medications, so the number of meds and refills I'm talking about is more than you might think for a dog.)
posted by misskaz at 9:24 AM on June 21, 2022
I'm not sure if this is what you are referring to or how I made it work, but I use GoodRx at Walgreens for my dog's medication, and they have my GoodRx account in their system and it's automatically applied every time I get a medication for her. I see it on the pharmacy printout as "your insurance saved you $x.xx". (She's been through a rough year including misdiagnosed not-actually-cancer and not-actually-autoimmune disorder, and is on permanent kidney and heart medications, so the number of meds and refills I'm talking about is more than you might think for a dog.)
posted by misskaz at 9:24 AM on June 21, 2022
FWIW I have Express Scripts as my mail pharmacy for my several meds. Been using them for years and haven't had any major issues except for they auto-enrolled me in auto-refills for an expensive med which I stopped using and then received $300 worth of it. That was sorted with just a few minutes of screaming at them. (In general, auto-refills has been a godsend.)
posted by neuron at 10:01 AM on June 21, 2022
posted by neuron at 10:01 AM on June 21, 2022
I emailed with Cuban about this when it came out. I think that, abrasive billionaire or not, his intentions here seem to be pretty simple: a financially self-sustaining organization that puts real competitive pressure on the rest of the industry to lower prices significantly. Seems that's already starting, so... good.
Part of our exchange in case anyone's curious, my questions summarized in parentheses, his responses verbatim (and filled with typos, lol):
(Who are your competitors?)
I haven't really looked at it that way. Our challenge is to keep pushing our prices lower
(Expected ROI?)
I want to be above break even while maximimg the number of people who can afford their medications .
Shoot. I would be happy if we can make a little, but push pricing of generics sold elsewhere down significantly
Our KPI is how much we reduce the stress of our patients who buy generic meds
Our mindset is that lower pricing reduces patient stress and that will lead to more customers
(What do you consider the hardest part of this operation is or will be? Logistics, negotiations, payments...
What is the process for choosing which drugs to pursue?)
All the above. It's like any business.
As far as the process. We choose drugs that we can offer at a price that is lower than what is out there already
(How to establish trust?)
When people save a lot of money on their medications they often will tell others they know that have the same challenges. That word of month impact our growth the most
posted by BlackLeotardFront at 11:47 AM on June 21, 2022 [11 favorites]
Part of our exchange in case anyone's curious, my questions summarized in parentheses, his responses verbatim (and filled with typos, lol):
(Who are your competitors?)
I haven't really looked at it that way. Our challenge is to keep pushing our prices lower
(Expected ROI?)
I want to be above break even while maximimg the number of people who can afford their medications .
Shoot. I would be happy if we can make a little, but push pricing of generics sold elsewhere down significantly
Our KPI is how much we reduce the stress of our patients who buy generic meds
Our mindset is that lower pricing reduces patient stress and that will lead to more customers
(What do you consider the hardest part of this operation is or will be? Logistics, negotiations, payments...
What is the process for choosing which drugs to pursue?)
All the above. It's like any business.
As far as the process. We choose drugs that we can offer at a price that is lower than what is out there already
(How to establish trust?)
When people save a lot of money on their medications they often will tell others they know that have the same challenges. That word of month impact our growth the most
posted by BlackLeotardFront at 11:47 AM on June 21, 2022 [11 favorites]
> I use GoodRx at Walgreens for my dog's medication, and they have my GoodRx account in their system and it's automatically applied every time I get a medication for her
Maybe it's just because I'm using it as a completely free/non-registered user, but every time I download the certificate it is good for only a few weeks. So next time I get a refill I have to get a new certificate, it has new numbers, the pharmacist has to re-enter it, etc. I've tried just leaving it be, but if you do that no discount is applied.
Giant PITA.
posted by flug at 6:04 PM on June 24, 2022
Maybe it's just because I'm using it as a completely free/non-registered user, but every time I download the certificate it is good for only a few weeks. So next time I get a refill I have to get a new certificate, it has new numbers, the pharmacist has to re-enter it, etc. I've tried just leaving it be, but if you do that no discount is applied.
Giant PITA.
posted by flug at 6:04 PM on June 24, 2022
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