Can Mark Cuban’s new online pharmacy provide a blueprint for the future?

Almost daily, a new story emerges on the exorbitant prices families must pay to acquire vital drugs like insulin for Type-1 diabetes or Epi-Pens for those at risk of severe allergic reactions. Unsurprisingly, Americans view these high prescription costs unfavorably and have consistently demanded industry reforms.

Now some companies are taking matters into their own hands to deliver high-quality drugs to consumers at affordable prices.

One such company is the Mark Cuban Cost Plus Drug Company (MCCPDC). Launched last January, the MCCPDC is named after its co-founder and primary sponsor, billionaire Mark Cuban. It’s also the brainchild of radiologist Alex Oshmyansky, who, like many Americans, desires to see cheaper drug prices. He hopes to make this vision a reality by buying generic drugs from pharmaceutical manufacturers and selling them directly to patients online. That system effectively bypasses third-party administrators, which are, to a great extent, responsible for high drug prices.

At the heart of the problem are Pharmacy Benefit Managers (PBMs) which serve as third-party intermediaries between drug manufacturers and insurers. These companies play a role in driving up the price of prescription drugs by leveraging their monopoly on information to set favorable contracts for themselves at the expense of everyone else. As a result, consumers and industry stakeholders frequently lack access to the information they need to make informed decisions.

For instance, PBMs receive large rebates from manufactures in exchange for favorable drug placement on insurers’ formularies – lists of generic and brand name drugs covered by prescription drug plans. Consumers must choose between a limited number of expensive drugs when filling a prescription. These limitations are unnecessary and can, at times, prove cost-prohibitive to families living paycheck to paycheck.

PBMs also hold significant sway over other things like discounts, fees, pricing policies and steering methods. All of these inputs are directly related to a lack of transparency that can distort the market and lead to higher prices for consumers.

The MCCPDC seeks to avoid these problems by establishing a more transparent pricing system and dealing with consumers directly. This mission includes honoring traditional health insurance and selling over 350 in-demand drugs to customers at discounted prices. The customer need only pay the manufacturer price of the drug, plus a flat 15 percent margin and $3 per prescription dispensing/delivery fee. The overall cost savings for consumers is substantial.

The MCCPDC website currently advertises the sale of medications Imatinib, Albendazole, Mesalamine and Lisinopril for $14.40, $33.00, $26.70 and $3.60, respectively. Each drug retails elsewhere for significantly more per month, even when factoring in cost savings from vouchers.

The company’s dedication to reducing drug prices is already reaping promising results. More than 1.4 million people have already signed up with MCCPDC, including 400,000 who have already filled at least two prescriptions.

MCCPDC has much grander aspirations. In the future, the company also hopes to make its own medications with the opening of a brand new $11 billion pharmaceutical plant in Dallas later this year. In addition, the company plans to add plenty more drugs to its product offerings, including low-cost insulin. The company is also in the process of developing a number of new business partnerships, including a recently announced collaboration with Pennsylvania health insurer Capital Blue Cross to lower prescription drug costs for members.

All of this is welcome news to consumers who will benefit from having another option to choose from when looking to fill a prescription. While MCCPDC only represents a small sliver of the existing prescription drug market, its rise is symbolic of a larger trend in which more and more companies seek to disrupt the current status quo in which PBMs routinely abuse their monopoly on information to drive up drug prices. Part of the solution may involve start-ups like MCCPDC bypassing PBMs entirely to deliver consumers high-quality drugs at prices they can afford.

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