Finance / Government Watch / Health & Wellness

Shark Tank’s Mark Cuban Has Free-Market Solution to Prescription Drug Costs

AMAC Exclusive – By Andrew Abbott

Mark Cuban

Following the passage of the misleadingly titled “Inflation Reduction Act,” Democrats have touted that the legislation will bring down prescription drug costs and reduce out-of-pocket expenses for patients. But while the bill may help slightly reduce costs for some medications for some Americans, entrepreneurs like Mark Cuban are showing that the most effective and expedient path to lowering drug costs is through the free market.

Cuban, a self-made billionaire, owner of the NBA’s Dallas Mavericks, and investor on ABC’s Shark Tank, has in recent months turned his attention to addressing the issue of skyrocketing prescription drug costs. But rather than advocating for more government regulations and involvement in the market, which is sure to hamper innovation and slow down progress, Cuban has instead created his own online prescription drug retailer, the Mark Cuban Cost Plus Drugs Company (CPDC), to sell generic medications to consumers at a fraction of name-brand costs.

Cuban’s model has shocked the pharmaceutical industry for both its simplicity and price transparency. While backroom deals between insurance companies and drug manufacturers often artificially increase prices, CPDC tells consumers up front that prices for drugs are determined by the cost of the drug from the manufacturer plus a 15% markup and a $3 pharmacist fee.

CPDC doesn’t accept insurance, which allows them to avoid unnecessary and expensive layers of bureaucracy. As a result, many of the more than 700 medications offered by the company are far cheaper than they would be with insurance. For example, the cancer drug Gleevac, when purchased through insurance, costs more than $2,500. But CPDC sells the generic version of the drug, Imatinib, for just $14. Another medication used to treat HIV is more than $1,000 cheaper than usual for a month’s supply on CPDC’s website. A psychiatric drug used to treat schizophrenia and bipolar disorder costs $6 instead of $678.

Thus far, Cuban’s model has succeeded and is even being emulated by retailers like Costco, Walmart, and Amazon. However, CPDC only sells generic drugs, which make up just 20% of prescription drug expenditures. The other 80% are brand-name drugs. The creators of these drugs still have government-granted monopolies on these products as they are the ones who researched and created them.

This is where a tremendous challenge in the medical Industry presents itself. While greedy middlemen and Big Pharma executives undoubtedly bear a large amount of blame for out-of-control drug prices, it is also true that the research and development of new drugs is a costly and time-intensive process—one in which there is no guarantee of success. According to the Congressional Budget Office, only about 12% of drugs entering clinical trials will ultimately approved by the FDA. The total cost from research to market introduction for a single drug can be as high as $2 billion and take as long as a decade. Thus, drug manufacturers incur extraordinary losses unless and until the drug becomes commercially available.

For this reason, the federal government permits short-term monopolies on new medications to incentivize and encourage drug makers to continue researching and innovating new treatments for patients. If the government were to simply allow manufacturers to copy pharmaceutical breakthroughs, companies would have less incentive to research and develop new treatments.

Cuban has expressed optimism that, in the years ahead, he will be able to balance the need for both innovation and lower costs. He believes that CPDC will be able to add as many as 1,200 new drugs by the end of the year, including several brand-name drugs. In a recent interview, he asserted, “the branded name manufacturers that we’re starting to work with see us as really an opportunity to regain control of pricing.” He’s even working on having insulin and EpiPens available for purchase (insulin manufacturers are notorious for adjusting formulas slightly right before patents expire to keep prices high).

One outlet covering the success of CPDC recently noted that the genius of Cuban’s solution lies in “approaching it as a business problem to tackle and less so as a political issue.” That’s good news for every American. As we have seen countless times, it’s always the vision of entrepreneurs and innovators – not the government – that deliver real progress for our nation and the world.

Andrew Abbott is the pen name of a writer and public affairs consultant with over a decade of experience in DC at the intersection of politics and culture.


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johnh
2 months ago

Good start & I suggest Congress pass laws on Tort Reform. The liability costs & class action suits are one of the reasons that some prescription drugs costs are so much higher in USA. :USA must limit these lawsuits in the future or drug companies will quit doing research & providing new drugs to the USA market.

Beth
2 months ago

I used to think that about pharmaceutical companies but have since changed my mind after reading about how universities do a lot of R

Debra Reynolds
2 months ago

It’s a good idea, as long as we remember that there IS a difference between generic and brand-name drugs for SOME patients. Those with highly complicated medical problems (intractable epilepsy, for instance) often need the BRAND name. And are often the patients least able to afford those massively expensive drugs, when gov’ts and healthcare cos. determine that “generic is just as good”.

BiggyD
2 months ago

“…there is no alternative way so far discovered of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by the free-enterprise system.” — Milton Friedman

tika
2 months ago

i’ve got a better one. i’ve eased out of blood thinners for ld aspirin, cholesterol, thyroid and bipolar the proper way while doctor keeps writing Rxs. i keep up on my bloodwork; shows i don’t need everything prescribed and i feel much better. this is not for everyone. my objective is to feel my best and see the dr WHEN I WANT, not because they want my billings. i grew up in the time when you only went to the dr when you felt sick. i’m 73. how long do i think i’m going to live. i’m concerned about living my best life now i’m retired; not living afraid of dying. having the best time of my life x-our communist government. i’m happy! wish you the same. p.s. i don’t read replies cause i’m out having fun i missed during my career. just sharing for readers consideration only.

J. Farley
2 months ago

I will pay Twice as much, if necessary, rather than buy from a Devot Socialist like Mark Cuban
He is a never Trumper!

PaulE
2 months ago
Reply to  J. Farley

People always have to research the details of what is being offered in the private sector, as well as from the government side. Bssically, the consumer needs to be aware of the pros and cons, rather than simply making a decision based on price alone. That’s called be an intelligent, informed consumer.

I would agree with you regarding Mark Cuban. He’s for open market solutions as long as he stands to benefit personally. Otherwise, he seems perfectly content to flip over to supporting Democrat policies when it is personally advantageous to him to do so.

Walt
2 months ago
Reply to  PaulE

Mark Cuban may be a billionaire but anything he offers is suspicious….Mark Cuban is a big mouth democrat

johnh
2 months ago
Reply to  J. Farley

Everybody cannot afford to pay twice as much as you, the answer lies in letting Pharma make a profit that is reasonable & one start is Tort Reform so that courts do not award multi-millions in class action suits.

PaulE
2 months ago

Private sector solutions always deliver better results than anything the United States government can deliver. The same holds true for any government around the world. That is simply NOT their focus or priority. Governments in general are NOT designed internally to be either efficient, innovative or cost effective.

anna hubert
2 months ago
Reply to  PaulE

As long as taxpayer is accountable to government and not other way around the gov.will be a millstone around taxpayer neck

Bart
2 months ago

I buy a drug from Mark Cuban’s company.
It’s $47 at CVS and $11 and $5 shipping from Cost Plus!! Highly recommend!!

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