As winter approaches his business empire, Mark Cuban still has a sharp stick in his hands, looking for a defenseless eye to poke.
“When I got into the NBA, half of the fun was just f—ing up the NBA,” Cuban said the other day. “The fines, everything. Everybody did it this way, and I was like, no. No. That’s no fun. And I bought this to have fun, and if you don’t like it, fine me. And it worked out great. Same thing with the pharmaceutical industry and health care. What can be better? Hopefully, we won a championship in 2011, and won, hopefully, a championship in 2024. That’s good. But f—ing up the pharmacy industry? Changed health care? Who was that guy? That’s the real deal. That’s a big check the box.”
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Cuban, who sold controlling interest in the Dallas Mavericks late last year to the Adelson and Dumont families, which run the Las Vegas Sands Casino Company, is still around the Mavs. He still owns $1 billion or so worth of the team. It’s just that he’s 65, and he and his wife have three kids, and … life. Going toe to toe with the NBA about its officials and marketing is no longer front of mind. Time makes some things more important; other things less so.
When the Mavericks clinched the Western Conference title over the Minnesota Timberwolves, Cuban’s absence from the center of the trophy ceremony was noticeable.
“They did look over, and (TV presenter) Ernie Johnson looked at me, like, OK, you coming up?” Cuban said last week in Boston, where the Mavericks lost the first two games of the NBA Finals against the Boston Celtics before losing again Wednesday in Dallas.
“And I was like, this is Patrick (Dumont)’s moment,” Cuban said. “I don’t care about that s—. It’s just like, when we won (in 2011), who did I give the trophy to? (Former Mavs owner) Donald Carter.This is (Dumont’s) first time. I’ve been there. I didn’t need it. I was standing right behind him. I was enjoying every moment. I’ve got my kids. I didn’t need to be a part of it. I’ve done it. I want to do it again.”
(Remember, this was before Game 2. The Mavericks’ title dreams are now in a 3-0 hole, with Dallas needing to beat Boston on Friday at American Airlines Center to stave off elimination.)
Cuban’s spending just as much time these days with his two-year-old Mark Cuban Cost Plus Drugs Company, a direct-to-consumer business with the simple goal of dramatically reducing the cost of prescription drugs. An easy lift for the “Shark Tank” star, right? Take on an industry that did $364 billion in revenues in the United States in 2022, per Statista. Challenge an industry that is literally called Big Pharma because of its seemingly impenetrable maze of regulations and hidden costs that the U.S. federal government has spent decades trying to tame, with little success.
“It’s the easiest industry I’ve been in to disrupt,” Cuban said.
Cost Plus Drugs operates on a simple philosophy: Buy or produce tons of mostly generic drugs, add a small markup, then sell the drugs directly to consumers. But Cost Plus Drugs states all of the costs up front, so customers aren’t hit with the teeth-rattling sticker shock all of us endure when we go to the local pharmacy to pick up our various pills and medications — even after our copays.
“The thing about the drug industry isn’t the Big Pharma companies; it’s the fact that it’s opaque,” Cuban said. “There’s no transparency whatsoever. When you get a prescription, you have no idea what you might pay, other than your copay. You have no idea what your employer is paying or whoever you have insurance with. Your employer has no idea what they’re going to pay. The manufacturer has no idea that you got a prescription from. No idea. Nobody knew anything.”
Whether he’s truly disrupting the business on a large scale or has simply staked out a niche corner of a sprawling, untamed boulevard that will go right on steamrolling most individual customers and businesses with huge costs for medicines is likely not going to be final for years. But Cuban does have supporters.
Different independent studies have determined that the practices of Cuban’s company could, if utilized at larger scale, save consumers hundreds of millions of dollars.
“I can tell you from my own personal experience as a consumer, that when I switched my prescriptions over to Mark Cuban, to try it, it saved me, last year, $700,” said Monique Whitney, executive director of Pharmacists United for Truth and Transparency, an advocacy group for independent pharmacists and pharmacy owners that works as an industry watchdog.
(To be transparent — pardon the pun — PUTT has skin in the game: Independent pharmacies have been decimated by Big Pharma, with the number of independent pharmacies falling by 50 percent nationwide since 1980.The latest survey covering 2022 puts the number of independent U.S. pharmacies today at around 19,000.)
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“I’m just on basic maintenance medication, ones that aren’t supposed to be very expensive,” Whitney said. “That was a real surprise for me, that that happened. His model, which is truly a cost-plus transparent model — and there’s smaller pharmacies that are doing something similar — I can tell you from personal experience as a consumer, that has worked. Unfortunately, it shouldn’t be complicated, but these things get complicated fast.”
Cuban started Cost Plus Drugs in 2022 after being approached by Dr. Alex Oshmyansky, a radiologist who graduated from college at 18 and who wanted to counter the pattern of egregious profiteering and price gouging of consumers by operators like former Turing Pharmaceuticals CEO Martin Shkreli. Oshmyansky emailed Cuban looking for funding help. Cuban responded, offering to bankroll the whole operation.
“I came in, Alex and I got together, and we were like, OK, this is the way it would work for us,” Cuban said. “We’re going to publish our costs on the website. We’re going to show our markup. And we’re going to publish our price list of everything, all 2,500 drugs, because no one’s ever done it before. And by being transparent, people will trust us. And that’s exactly what happened.”
Cuban said more than two million people have used his company since its founding, and it now buys or produces more than 2,500 drugs, most of them generics. He said he’s willing to deficit spend for the foreseeable future.
“We’re not losing that much money,” he said. “And if we keep going the way we’re going, I’ll make a little money. And we’ll use it to add more drugs to our factories, so we can make more.”
Mark Cuban is still a steady presence at Mavericks games. (Petre Thomas / USA Today)
To understand what Cuban is doing, you have to wade — it’ll only be for a few minutes — into the byzantine world of the U.S. pharmaceutical industry.
Drug companies produce medicines. The ones that are cutting edge, newest to the market, are brand-name drugs. Because they’re cutting-edge, drug companies charge everyone more to buy them. Eventually, though, many, though not all, drugs can be copied, with their basic ingredients and effectiveness recreated by other companies. Those drugs are generics.
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For example: Aspirin is a pain reliever and inflammation reducer. Bayer first mass-produced the drug under its brand name at the turn of the 20th century, selling a kajillion or so bottles. But, eventually, other companies reproduced the pain-reducing mix of chemicals that aspirin comprises and today sell aspirin in pharmacies as a generic drug, almost always at a lower price. Brand names and generics both have to be approved by the Food and Drug Administration and have to have essentially the same effectiveness as a medicine.
In the last 60 years or so, so-called Pharmacy Benefit Managers (PBMs) have emerged as the key conduit between drug companies, insurance companies and consumers. The Harrison Narcotics Act of 1915 prohibited anyone who manufactured drugs from being able to sell them in the United States without government approval and required people to begin getting prescriptions from doctors for narcotics that were still viewed as having accepted medicinal purposes. That requirement was extended to non-narcotic drugs in 1951.
Within a few years of that second requirement, PBMs began to emerge. They served, and serve, as middlemen that help manage prescription drug benefits for insurance companies and negotiate prices for drugs for consumers, as well as help determine what drugs are available through your insurance plans. Because they have so much influence, PBMs get paid both by insurers who use their services and through rebates they negotiate with the drug companies, by retaining some of the payment rates the companies pay to pharmacies and insurers. But the PBMs also create pharmacy networks and make deals with them about what drugs they can carry.
And, often, PBMs keep a significant share of those rebates for themselves, rather than passing on savings to consumers. Smaller PBMs do more transparent “passthroughs,” where the lion’s share of the rebates are directly passed back to consumers — and don’t add any additional markups to the cost of the medications. But they usually represent companies with very low numbers of employees.
Currently, three PBMs — CVS Caremark, Express Scripts and OptumRX — control about 80 percent of the marketplace. Three smaller PBMs control almost another 10 percent. The Federal Trade Commission has an ongoing investigation into the business practices of the PBMs.
There’s nothing illegal in the PBM’s practices. They negotiate with the drug companies and insurers, not with you. The question is, how much does their business actually save consumers? That’s the crack companies like Cost Plus Drugs seek to exploit.
“When I looked at my insurance, when we started, I said, OK, I’m going to look at my stuff, my drug costs (for the Mavericks),” Cuban said. “They charge me, for just generics that cost over $30, when we first started Cost Plus, the Mavs paid $169,000. And the (same drugs under) Cost Plus Drugs would have been $19,000. It was my money; we self-insure. So I was writing the checks. And I was like, I feel like a f—ing moron. Because why are we doing this? The truth is, nobody knows.”
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Cuban opened a new robotic plant in the Deep Ellum neighborhood in Dallas earlier this year that will produce injectable drugslike Pitocin (which helps induce labor) and Ephedrine that are in shorter supply.
“There’s hospitals that can’t get this stuff,” Cuban said. “The companies other than us, who made it before us, they were like, OK, we’re gonna gouge. Not too bad, to get us in trouble, but just enough to make us more money. We’re like, f— that. …We can make two million bottles a year, and we’re going to charge ’em a lot less. So they’re rushing to our door. We don’t just deal with patients directly, on cash, but we deal with insurance companies, we deal with hospitals. We work with everybody. And it’s just been amazing.”
At some point in the near future, though, Cuban and Cost Plus Drugs will have to wade deeper into getting more brand-name drugs under their umbrella to maximize their impact.
“For Mark Cuban to be totally effective in what he wants to do, he also needs to find a way to bring in branded medications,” said PUTT president Deborah Keaveny, who owns a pharmacy in Minnesota.
“Because of the relationship between the manufacturers and the Pharmacy Benefit Managers and the whole rebate game, they’re not likely to allow him into that arena, because he would disrupt the revenue streams of that market,” she added. “As far as how many dollars, what his financial impact is, I can’t really attest to that. But I can say that people are taking notice. The Pharmacy Benefit Managers are also taking notice, because they seem to have launched their own cost plus networks in there. I would argue,if they were so good at saving everybody money, for the insurance premiums that people are paying, then why do they even need a cost plus?”
Cuban said he’s in this new business for the long haul. Hey, it’s Big Pharma. You can’t guarantee he’ll come out on top. But given his track record, and his willingness to pay fines during the David Stern era for spouting off about almost anything — and eventually winning out — you shouldn’t dismiss his chances, either.
“If I can get CEOs and benefits people at those big companies to just act in their self-interest, financially, and the wellness of their companies, it’s easy,” Cuban said.
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“So when I sit with a CEO, and they say, ‘No, we have a great (program), our benefits people feel.’ I say, ‘No, just look at this, this, this and this.’ Their contract has all this nebulous language where they charge you all these different fees that you don’t even know they charge you. They just net it out, or they work through an intermediary. They say they give you all these rebates and passthroughs, but they’re buying it from their own company, who marked it up. So yeah, they’re giving it to you, but they’re keeping it over here in the right pocket, and they’re giving it to you on the left. So all I have to do is go to the head of The New York Times, and the CEO, and say let’s just look at your contract, and I’m going to show you all the problems.”
(Top photo of Mark Cuban: Brendan Smialowski / AFP via Getty Images)
