Mark Cuban wants to start 2023 riding the momentum he’s developed as the chief disruptor of the pharmaceutical industry.
In one year the 64-year-old tech entrepreneur has managed to do what Warren Buffett, Jeff Bezos and Jamie Dimon could not do by uniting their names, their influence and the power of their respective companies: sharply reduce the prices of pharmaceuticals in the U.S.
To do this, Cuban, the owner of the NBA’s Dallas Mavericks, co-founded the online pharmacy CostPlus Drug.
And if anyone questions how seriously Cuban takes this cost-reduction effort, which many observers consider next to impossible, consider this: The company’s official name is Mark Cuban CostPlus Drug Co.
“It’s the only company I have ever put my name on,” the billionaire told TheStreet in October. “I wanted drug manufacturers, providers, patients to know that I truly care and am committed to making this work.”
Cuban Leverages Word of Mouth for ‘Big Impact’
Thanks to Cuban’s energy, the online pharmacy had a breakthrough in 2022, taking advantage of word of mouth on social networks and urging consumers to choose Cost Plus when the prices of the pharmaceuticals they need keep rising.
“Thanks @costplusdrugs a 90 day supply of my medication with expedited shipping was 1/4 of what the pharmacy wanted for 1 month supply with a discount card!” wrote one Twitter user on December 30. “Get your meds from Mark Cuban’s http://Costplusdrugs.com and save money 💰”
Another Twitter user couldn’t believe the price disparity between regular pharmacies and Mark Cuban CostPlus Drug.
“@costplusdrugs I cannot thank you enough for this service. My scrip is normally $440 for 90 days. Your price is $40. ❤️,” said the user.
TheStreet can’t verify the figures the tweets describe, but testimonials of this type have been swarming on social networks for several months.
“Our goal isn’t to make a lot of money or sell the company,” Cuban told TheStreet, via email on Jan. 3.
“Our mission is to be the low-cost provider of every medication we are allowed to sell. That’s not typical. We are a PBC. We aren’t looking for a big exit. We are looking for a big impact.”
PBC stands for Pursuit of Corporate Good, which means that directors of Mark Cuban CostPlus Drug are required to consider a range of factors, not just stockholder value, when they make corporate decisions.
Transparency is key to the strategy. CostPlus fills and delivers prescriptions at cost plus a fixed 15% margin. “We show our cost, we show our 15% markup. We price on a cost-plus basis that users get to see,” Cuban said.
Cuban is able to provide these prices because there’s no distributor in the middle. CostPlus bypasses health insurers and negotiates directly with drugmakers.
Ambition: ‘Push Pricing Down, Add Branded Drugs’
The company is gaining prominence and is getting more and more ambitious. Cuban tells TheStreet that this year some key objectives of his online pharmacy is to lower drug prices even further and expand its customer base and drug offerings.
“Add branded drugs. Push pricing down lower. Expand our reach to millions more patients,” the billionaire said, setting ambitious goals that clearly send a message to the current drugstore leaders, CVS Health (CVS) – Get Free Report and Walgreens Boots Alliance (WBA) – Get Free Report.
Cost Plus is advertising a 30-count supply of 100mg imatinib, which treats leukemia and other types of cancer, at $14.40. A patient saves more than 98% from the retail price at other companies, $2,502.50. Imatinib is the generic version of Novartis’s (NVS) – Get Free Report Gleevec.
The online pharmacy has generic treatments for almost 70 diseases and health issues. Treatments available at Cost Plus include drugs for asthma, breast cancer, alcohol addiction, diabetes, opioid addiction, mental health, dental care, heart failure, birth control and more.
If Cuban achieves his objectives, Cost Plus should become a real threat to traditional distributors, forcing them to react in order not to lose significant market share.
The billionaire is convinced the wind is at his back. “People want to save money on their medications,” he said. “That will drive out growth.”
He urges consumers to send him the names of drugs that have outsized prices so he can try to find a way to offer them and undercut the market prices.
“If there is a generic that you can not afford, or that is charged for hundreds or thousands of dollars to your employer’s insurance, please reply with the name and we will see if we can source it,” he wrote on Twitter in November.
Cuban Is Not Seeking New Investors in Cost Plus
The star of the hit TV show “Shark Tank” founded the company in January 2022 with a partner, Alexander Oshmyansky.
Cuban does not, at least for now, plan to open the capital of the online pharmacy to other investors. TheStreet asked him whether he planned to bring in new shareholders this year, and he said: “Not at this time.”
Cuban’s pharmaceutical revolution has been hailed by studies including one from Harvard University.
“In 2020 alone, Medicare could have spent $3.6 billion less on generic acid-reflux, cancer and other drugs if purchased through Cost Plus Drug Co., a new online pharmacy backed by Mark Cuban,” a study from Harvard Medical School researchers found.
The company’s business model may also benefit health insurers, including Medicare, which spent an estimated $115.6 billion on prescription drugs last year, or nearly a third of total U.S. drug spending, the study added.
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