Mark Cuban’s pharmacy could have saved Medicare $ 3.6 billion
Medicare could have saved $ 3.6 billion in a single year if it had bought generic drugs at Mark Cuban’s online pharmacy, according to a report from Harvard University.
In the report, published this week in the Annals of Internal Medicine, researchers at Brigham’s and Women’s Hospital with Harvard Medical School claimed that Medicare is wasting money on its way of buying drugs.
Its report estimates that Medicare’s Part D annual spending on 89 generic drugs is $ 9.6 billion under the current purchasing model, in which the government has banned drugs directly from manufacturers.
“If Medicare bought generic drugs in the maximum amount provided by Mark Cuban Cost Plus Drug Company it could have saved $ 3.6 billion on 77 of 89 generic drugs, ”says the study, which notes that the savings would come from eliminating drug distributors.
Cuban, the billionaire owner of the Dallas Mavericks and a famous investor in ABC’s Shark Tank, entered the pharmaceutical industry earlier this year with Cost Plus Drug. The direct-to-consumer pharmacy buys generic drugs from manufacturers and sells them to consumers at the price of ingredients with a 15% purchase margin, a $ 3 per labor fee, and a $ 5 shipping fee.
Cost Plus Drug sells more than 700 prescription generic drugs and still does not accept insurance, highlighting its accessibility for everyone.
“Our goal is to be the low-cost provider for anyone with a prescription from their doctor,” Cuban wrote in an email exchange with The Dallas Morning News. “We will work with anyone.”
A different report from Harvard Medical School researcher at Brigham and Women’s Hospital Benjamin Rome, co-author of the Cost Plus Drug research, showed that the average price of brand new drugs has risen 20% a year from 2008 to 2021. These drugs receive government monopoly protection periods, when manufacturers can set prices. Rome said that when protections end, generic competition can begin and prices can go down.
“We know generics drugs lead to huge savings for patients and our healthcare system, “Rome said.” But what is clear from our new study is that even when drugs face generic competition, there are inefficiencies. in the supply chain that sometimes causes Medicare to overpay for those drugs. “
Companies like Good Rx try to mitigate high drug prices by helping consumers find the cheapest place to buy their drugs, but they don’t come out of the supply chain model that leaves prices to insurance companies and brand manufacturers.
The Cuban company evades the whole system.
Atorvastatin, a drug commonly prescribed for high cholesterol, is the active ingredient in the Lipitor brand name drug. On the Cost Plus Drug site, the retail price of 30 tablets at the lowest dose is shown at $ 55.08. Cost Plus Drugs offers the same amount for $ 3.60, without insurance. In 2018, about 35 million Americans were taking some form of statin for high cholesterol, making the family of drugs one of the most prescribed in the United States.
Alex Oshmyansky, CEO of Cost Plus Drug, said he will open his services to commercial payers in the next three to six months and could allow patients to use their insurance on the company’s site later this year. , which means Medicare recipients could also use the service.
“The important part is when we work with insurance companies effectively for the benefit of employees … it will be on our terms,” Oshmyansky said. “The same price that is on our website is the price that the payer, be it a large insurance company or a large self-insured businessman, is the same price that everyone would pay. Of course, in this context, we could also work with Medicare Part D plans. “
Cost Plus Drug was launched in January 2022 to sell generic drugs at the manufacturing price + 15% + $ 3 pharmacy fee + $ 5 shipping.
“I was struck by the paradoxical disparities in access to affordable drugs that I witnessed as an internal medicine physician in Dallas from 2018 to 2021,” Lalani said.
He said some of his low-income patients in Dallas could receive state-of-the-art drugs at little or no cost with Parkland’s financial help, while his elderly Medicare patients were caught with high out-of-pocket costs for name-brand name drugs.
“This is the paradox of health insurance design,” he said.
Texas was the third state with the most Medicare spending in 2019, with a total of $ 28.5 billion, after Florida ($ 28.6 billion) and California ($ 41.1 billion), according to data from the Kaiser Family Foundation.
Mark Cuban Cost Plus Drug Co. “It is more likely to help uninsured jeans who do not have access to affordable prescription drugs through local county hospitals,” Lalani said. “It can also help underinsured jeans who have a health plan with a high deductible.”
Although the Harvard report did not specify Medicare spending by state, the $ 3.6 billion savings could apply to 14% of the state’s population currently enrolled in Medicare. Medicare Part D plan premiums in Texas ranged from $ 7 to $ 155 a month in 2021, but a service like Cost Plus Drug could eliminate the need for 1.65 million Medicare beneficiaries in Texas use Medicare Part D stand-alone plans.
Cost Plus Drug is also building a 22,000-square-foot plant in Dallas ’Deep Ellum neighborhood to manufacture its own generic drugs. By manufacturing drugs on the U.S. Food and Drug Administration’s shortage list in the U.S., Oshmyansky said prices could drop even more than they do now.
The company “will pass the savings on to the patient at every step at the end of the day,” he said.