Mark Cuban's pharmacy started with a cold email (opens in new tab)

Ok; personally knew Alex. I think there is a lack of understanding here. Yes maybe you can get some drugs cheaper at Walmart, but certainly not all “generic” drugs. Once a drug is outside patent protection, others can manufacture it but you have to show equivalence, which can require samples from the original or existing manufacturers, who can and have tightly controlled distribution to make it very challenging to get approval. Couple that with the risk of an existing manufacturer just dropping the price to eliminate any potential profit and you can see how some drugs can get into the place where there is only one source that can raise their prices as they see fit. I believe the idea here is they will eventually manufacture or source those drugs that are patent unencumbered but sole source. Yes, the system is terribly imperfect (both a physician and a chemical engineer here). Yes, it doesn’t sound like this is a charity. But expecting that the walls of regulatory capture to just fall down because it would better for all of us is just wishful thinking. Let’s save our criticism for those raising the prices of epi-pens and what not year over year. I think the criticism here is misplaced - the company was incorporated with a public mission in mind, and they seem to be moving into manufacturing; it wouldn’t make much sense to make something that can already be sold at Walmart for $4. Let’s see how it goes and wish them the best.

They plan to both manufacture and resell.

>15% markup plus pharmacy fee plus shipping and handling.

This is the intent, and still cuts out at least 2 middle men between consumers and manufacturers: the insurance company and pharmacy benefit managers.

It’s a startup, so it’s an iterative approach. They launched with a setup that gets them into the market fast. However, you are right in that this ain’t that big of a deal.

Pharmacies pay the acquisition price for the drugs. Then, they make up a fictitious price (called the Usual & Customary price). The U&C is intentionally very high, because it forms the basis for negotiating with pharmacy benefit managers (PBMs).

The Cuban-funded venture uses this as their price comp, calling it the “retail price”. However, the U&C price is only the retail price for one group of people: those without insurance who do not know of drug discount “cards” (nowadays mostly mobile apps such as GoodRx nowadays).

Basically, anyone with insurance or a (free) discount card will get a hefty discount on the U&C (always compare the two before using insurance, as sometimes, the “regular” discount is higher than the insurance one). Just plug some of the expensive drugs into GoodRx et al to compare and you’ll find that in some geographies, the Cuban-funded co is cheaper, while in others, it is more expensive (drug discounts vary across pharmacy geo. locations).

Pharmacies give non-PBM entities discounts bec they make money regardless. Let’s say, you start an Rx discount biz. You can go to pharmacies and negotiate a discount plus a small margin for yourself. This is how GoodRx is making (lots of) money, for example.

Now, the innovation with this new co is that previously, drug discount cards and pharmacies were usually two different parties. All they did was to partner with a mail order pharmacy, negotiate a discount (acquisition + 15% is the classic Costco pharmacy price btw), set up a website, and tell everyone “look at how much cheaper we are!”.

The future vertical integration comes from taking this a step further and partnering with generic drug makers. I also suspect that at some point, they’ll start their own pharmacy.

I’ve been waiting for GoodRx or another discount provider to bundle these 2-3 steps in the distribution chain, but they have never done this. Perhaps they worried about competing with their pharmacy customers, as their model is going wide, rather than deep, while this new Cuban-funded venture is going deep instead, partnering with a single pharmacy.

Beats me why their pharmacy partner (or other such cos) wouldn’t just start adding their own discount biz. But perhaps they’re doing that and they had other reasons to do this…

Yup, as someone who had some experience in the industry, this screams naivety.

Generic drugs are pumped out for pennies a pill by a pre-existing infrastructure across the globe. Mark will be buying from them, not spending billions trying to replicate manufacturing plants and FDA agreements.

In essence it’s a cash-only pharmacy for cheap generic drugs - not that different than what Walmart and Target do with their $4/month prescription drug program.

Big pharma won’t give a shit because Mark can’t make his own generic versions due to IP.

He might make a difference for those weird edge cases like Daraprim (sp?) where the market is so small, supply is constrained, so mark ups are huge. But those are weird edge cases that don’t last long.

it seems manufacturing is on the todo list.

https://khn.org/morning-breakout/mark-cuban-unveils-plan-to-...

>I'm concerned that Mark Cuban is capitalizing on people's lack of understanding about how insurance works and how easy it can be to look up drug prices (use your insurance company's website or just pick up the phone and call your pharmacy, they'll check for you)

That certainly hasn't been my experience. Most pharmacies I've tried this with need to actually 'fill' the script and run it through insurance to get a final price. And, in the era of 'COVID-related staffing shortages', good luck calling the pharmacy and actually getting someone on the line.

The sad thing is, all these pharmacies know about GoodRx and other discount providers. They could stop playing games and just run all scripts through these providers to get a 'cash price', but they don't. It's honestly like shopping at Kohls where if you aren't stacking coupons, you're the sucker paying too much.

I don't know about Cuban's mechanics here, but a website that shows you the final price, no games/codes, is a great addition to the market.

I'm not sure what your point is: It seems you are cherrypicking and then generalizing. For example Duloxetine (generic for Cymbalta) is $4 at CostPlus and $15 at the Walmart link. That in and of itself really does not prove anything either. I may be wrong, though, it's just one additional data point.

Maybe you can do the analysis you mention and publish it? The worst that will happen is that all us laypeople will be better informed.

I think though that CostPlus, if nothing else, has opened the eyes of a great many people who just assumed medicine was like any other product where the manufacturer controls the price and if someone is making obscene profit, it's an outlier like the Shkreli douchebag. Now a lot more people know that it's possible to pay a lot less. Even on TikTok I'm seeing people paying much less for their prescriptions when they bypass the insurance company and pay full retail price, which is counterintuitive as hell, and I personally would have never guessed.

So all in all, I think it's hugely positive that the secrets are getting out, and CostPlus is invariably a large part of that.

> In 2020, 8.6 percent of people, or 28.0 million, did not have health insurance at any point during the year[0].

[0]: https://www.census.gov/library/publications/2021/demo/p60-27....

> Mark Cuban's pharmacy, however, refuses to deal with your insurance

I don't see a problem with this. Some insurance plans are can be hard to deal with. My personal experiences involve requiring step therapy (trying a cheaper, possibly less effective drug) before approving the prescription. Another experience is that a drug may only be covered for one condition but not for another (e.g. finasteride for hair loss vs finasteride for enlarged prostate).

If Cuban wants to avoid the headache of dealing with formulary lists, I don't blame him. Obviously consumers should compare prices whenever possible, but if the difference is only a few dollars I'd probably rather pay Cuban directly than deal with the Walmart retail experience.

> You can drive to any local Walmart and get it for $4 and they will bill your insurance > and they're going to charge an extra $5.00 shipping at checkout

I'd say driving to wallmart and dealing with insurance can be as much as $5 worth of gas and time for some.

Isn't that exactly the problem? When you factor in the cost of health insurance, Americans pay a buttload for healthcare compared to the rest of the developed world. A big proportion of this is because when people see expensive drugs they just ¯\_(ツ)_/¯ and say "my insurance pays for it". All this once-removed cost makes it hard for people to reason about what they are overpaying for as an individual so as a society we end up overpaying for everything. This is the same reason hospitals in America have incredibly convoluted and confusing and opaque billing practices – the harder it is to parse the true price you're paying for something (esp. in advance), the harder it is to vote with your wallet.

> anything to bring down drug prices. On the other hand, I'm increasingly uncomfortable with just how much free marketing and PR is being applied to the "Mark Cuban Pharmacy" without much critical examination of what's going on here.

I've avoided simple things like up voting stories about it for exactly this reason. Sure the headline sounds great but without actually going through the math and how the site works who knows if it's actually good.

The amazing thing is that he's telling everyone exactly what he's doing. He wants to extract 15% as a middleman in an industry that transacts 100+ billion a year. All for running a simple website and taking on a tiny bit of transaction risk. And people think it's a charity instead of business worth billions.

>Except nobody should actually be paying $22.80 for generic Prozac. You can drive to any local Walmart and get it for $4 and they will bill your insurance, which will count toward your deductible. (Walmart has a list of their $4 and other cheap prescriptions here: https://www.walmart.com/cp/4-prescriptions/1078664 )

Can you elaborate on how this works? Are they giving you 30 days' supply of drugs for only $4, even if you have no insurance? Are they charging both insured/uninsured people $4, but billing the insured people more (via insurance) to make up the difference?

It's basically the Spirit Airlines of pharmacies.

>Mark Cuban's pharmacy, however, refuses to deal with your insurance

I would say this is a net good. It significantly reduces their costs.

Also there are many, possibly the majority of, cases where their prices are substantially cheaper than Walmart.

https://www.walmart.com/cp/4-prescriptions/1078664

https://costplusdrugs.com/medications/

I've been frustrated with the 'Mark Cuban Pharmacy' for weeks now as well. At the end of the day, it is a way to capitalize on a lucrative industry and as you've pointed out, doesn't always work out in such a way that consumers will be better off for solely going through this new pharmacy venture.

The point is that I have to drive to a local walmart and deal with insurance. That sounds harder.

Your point being what? You seem to be saying: "But it's still better with insurance and in any case it's not as ideal as I'd like (as an insured person with decent insurance)" Okay, and what about the simple fact that for those people (many millions of them) who do not have insurance, or have shitty, finicky insurance, this is still a considerable possible improvement?

You extrapolate your privileged position to create a whole criticism of a more viable and affordable way of buying medicine that many people outside your situation would maybe embrace because they lack the same options.

Following on from this discussion of Walmart's discount drugs, most or all of the pharmacy chains have similar programs, though it's possible that CVS or Walgreens (or both?) require being a member of a paid discount program.

IIRC Meijer does free antibiotics and some maternal health stuff, Costco just generally has pretty low prices that are published, Walmart is linked in the parent, Kroger has a variety of free/$3/$6 medications in some kind of association with GoodRX, I didn't see anything for Albertson's on a quick search but there may be one.

But what rate is my insurance "billing" for the total price of the transaction with my insurance?

So - while you may be able to get nearish the same price (before the shipping) <-- But am I consuming less of my insurance and also paying less to insurance companies, which are just hedge funds anyway...

So, if Mark Cuban the Billionaire can start a pharmacy model such as this, not dealing with insurance, then what precludes market competition with his pharmacy?

Franchise license with supply chain to open ones own brick and mortar etc...

Serious questions.

Well, if you need something shipped to you, you're probably paying for it if it's not a loss leader/cost-of-business for the shipper. Buy something from Walmart and they're charging you shipping if you're not having it sent to one of their stairs. So you can't lump in shipping on one end and ignore it on the other.

Your entire criticism seems to be "there may be specific circumstances in which this isn't actually cheaper, and that's bad because Mark Cuban."

Your walmart link is quite a discovery for me. I've always been suspicious when my pharmacy congratulates me on saving whopping 200 bucks on my generic meds, but I couldn't have imagined that a one year supply of this stuff can be had for under 40 bucks at walmart. In other words, my pharmacy's markup exceeds 50x of the original price (probably 100x since they buy it in bulk).

> just pick up the phone and call your pharmacy

It's 2022, and if your prices are not on a web page, they're clearly not a selling point.

I’m from the UK

> Except nobody should actually be paying $22.80 for generic Prozac. You can drive to any local Walmart and get it for $4 and they will bill your insurance, which will count toward your deductible.

FWIW I thought this meant that it was $4 because of “your insurance” or “deductible” but I think you meant it’s $4 for people that aren’t insured? And people that are insured get it for free?

> Except nobody should actually be paying $22.80 for generic Prozac. You can drive to any local Walmart and get it for $4 and they will bill your insurance, which will count toward your deductible.

Except people can, and do, all the time. Source: they lady in front of me at the pharmacy counter today, who didn't want any "risky generics".

Is the pharmacy cheaper than AllDayChemist (including shipping)? Doesn’t look like it.

I guess the wait time and complexity of ADC might not make sense for those without insurance.

Many people prefer dealing with cash and don’t want to go to the pharmacy.

You should read the submarine [0], a great article on why this happens that I found here on HN.

TL;DR: writing news is hard and journalists are overworked and underpaid. Media firms for companies basically write these articles for journalists, and since they aren't technically false everybody wins (except the reader) because the news agency gets a lot of "news" and the companies get exactly the spin they want.

[0]: http://www.paulgraham.com/submarine.html

Are you aware millions of Americans don’t have such insurance?

I deplore the medication rebate racket as much as anyone, but it's not a kick-back.

A kick-back would go to the doctor or pharmacist for pushing the customer toward a medication. The problem in this scenario is the monetary incentive to mislead the customer.

With medication rebates, the customer is getting the drug one way or another. The rebate just discounts the effective price and sends the discount to the customer. The only party not aligned is the insurance companies (who, IMO, probably hate this system more than anyone)

If I got my grocery store and they say “buy 5 bottles of shampoo and mail your receipt for a $5 rebate” am I getting a “kick back”?

PBM rebates are not illegal. They aren’t transparent to patients (which is a problem) but they aren’t illegal.

PBMs are just departments in managed care organizations (MCOs), aka health insurance companies nowadays. MCO profit margins are 5% or less, so if you buy coverage from an MCO, it makes no difference to you what the PBM division does. Any money made by PBM divisions just goes to offset expenses in the insurance division. If the PBM makes less money, then insurance premiums have to go up.

The chain of money goes from managed care/insurance buyer (individual/employer/government) to MCO to healthcare provider, whether it be a pharmacy, a drug manufacturer, a hospital, or a doctor. The fact that the middle has a tiny profit margin means there is not much juice to squeeze there.

Even if it’s an honest statement, what happens when Cuban dies or otherwise no longer controls the business? Inevitably someone will take control and raise prices to match the rest of the industry.

The root problem is having for profit companies involved in providing critical medical treatments. The solution is for people to band together and create an entity (the government) to provide these treatments at cost without the incredible inefficiency of for profit business.

> I don't care if it will mean millions of people in the insurance, hospital administration, public and private health policies will be out of jobs. Sorry I don't.

As someone who works in this industry, though for a non-profit medical practice group, we want it gone as much as the patients. It's an absolute nightmare to do anything. We have a staff of twenty people just to deal with the paperwork side of the business, and that doesn't include answering phone calls from patients. All of those people could be put to far more productive use doing anything else; half of them are people who wanted to get into medicine but not through a full-fledged medical degree and are now toiling away shuffling forms. We would love to move them to patient care assistants or anything else but we have to have them in order to get paid.

(I know for sure we would like to have them do other things and they would like to do this because our group has a role rotation program where people can rotate in and out of groups to try other things. The insurance/paperwork group has virtually no one want to rotate in and almost the entire group is on the list to rotate out for a month or two a year to do something different.)

> Also for doctors, medical schools, state medical license issuing bodies, you are gonna allow minimum 10x increase in new doctors entering your field.

I also completely agree with this. It's frustrating to deal with the regulatory issues, too. We had to move a practice office (that is, where patient care is provided) from a place we leased to an office we bought as part of a commercial condominium a few years ago. Getting that approved took months of back and forth because the rules of the licensing body didn't fully contemplate an "office condominium" like we purchased.

There are a lot of "obvious" things in medicine that could be easily solved if there were political will. The reason most things are expensive is due to existing regulations that add unnecessary hurdles.

For example, prescription glasses can be made for a few dollars, but often cost over $100 and you have to pay to see the optometrist for a prescription.

In reality, you could walk up to an automated machine, have it assess your vision, and pay $10-$20 for a pair of glasses. This has actually been proven in other countries that allow you to buy glasses without a prescription. In a competitive market, price of a good tends to trend towards marginal cost of production... which is clearly not the case in a lot of medicine/vision etc.

Also, my copay for one of the medicine's on Cuban's site is $50, but on the site it's $3. Why is this? Seems some exploitation of incomplete information... could be fixed through regulation... like requiring pharmacies to show pricing of generics when filling prescriptions.

Also hospitals don't list pricing... though there was a rule passed under the Trump admin that requires them to do so. Not sure if this is in an easily consumable format yet.

So I agree with your sentiment, but don't think it can be disrupted without changes in law. Primarily there is way too much information asymmetry in all areas of medical care

Those companies, especially Amazon; Google; and Apple, are only evil MNCs on HN/Reddit and media (mainstream or otherwise). In the real world, these are America’s most trusted and beloved brands. Brand loyalty is high for all three and if they announce they’re going to make anything, the country as a whole is excited to see what comes of it. Irrespective of whether they listen to Fox or CNN, people know from their lived experience that their search engine is fantastic, their phones are fantastic, their shopping experience is fantastic.

To make it even better, the folks on the street who hear you work there think you are übersmart superstar solving the world’s problems.

There are probably tens of millions of people hoping they do something like what you’re asking for.

Of course, I don’t think it fits in their wheelhouse. We’ll see.

Really cool, thanks!

These companies are not the same and are not offering drugs at cost. I searched for a drug that I’m paying a ton for (even with insurance). Honeybee doesn’t have it, Blink quoted me $1,200. With insurance it’s $600, GoodRx let’s me get it for $200.

Seems like the more companies like this with varying abilities of marketing to get as widespread outreach the better.

What's the point of this comment?

Are you going to go to Pakistan to buy it?

This is an actual pharmacy. Goodrx is wonderful, but it's basically an exploit of the existing pharmacy+PBM system and pharmacies would love to cut it off. Real pharmacies with cheap and transparent pricing are going to be better for patients in the long run.

Haha, you can't be great at everything.