Marc Cuban’s Drug Company Could Save Medicare Billions: Analysis
Health Care

Marc Cuban’s Drug Company Could Save Medicare Billions: Analysis

REUTERS/Mike Blake

Medicare would save billions of dollars if it purchased generic drugs at prices similar to those offered by a pharmaceutical company founded by billionaire entrepreneur Marc Cuban, according to a new study published in the journal Annals of Internal Medicine.

Cuban launched the firm – the Mark Cuban Cost Plus Drug Company – at the beginning of the year to provide more than 100 generic drugs without the exorbitant profits and middlemen charges that are typically found in the market.

“Our approach at Cost Plus Drugs — which is we'll show you our actual cost, we'll mark it up 15%, we'll add $3 pharmacy handling fee and $5 shipping, and that's all you ever pay," Cuban told PBS earlier this month.

The study by researchers at Brigham and Women’s Hospital in Boston looked at how much money Medicare Part D would save if the program purchased all the generic drugs it could from Cuban’s company. Of the 89 drugs that could potentially be purchased, 77 were less expensive through Cost Plus Drugs (the remaining 12 were the same price). According to the analysis, Medicare would save $3.6 billion, or 37%, by paying those lower prices, reducing its bill from the $9.8 billion it spent in 2020 to $6.2 billion.  

The researchers say that the study shows how inefficient – and costly – the current drug distribution system is in the U.S., even for generics. “Generic drug competition is a major source of prescription drug savings in the United States, but the lower prices from a direct-to-consumer model highlight inefficiencies in the existing pharmaceutical distribution and reimbursement system, which includes wholesalers, pharmacy benefit managers, pharmacies, and insurers,” the study says. “By one estimate, this supply chain retains 64% of every dollar spent on generic drugs, compared with 25% of every dollar spent on brand-name drugs before rebates.”

Obviously pleased with the results of the study, Cuban sent a tweet tagging political leaders, including President Biden, Speaker Nancy Pelosi (D-CA) and Sens. Mitch McConnel (R-KY) and Bernie Sanders (I-VT): “have your people call my people and let’s get this done.”