CostPlus Pharmacy – Not Philanthropy

April 16, 2022 • Uncategorized • Views: 779

Mark Cuban

The internet has been all astir for months about the entrance of billionaire Mark Cuban into the pharmacy market with his CostPlus pharmacy model – touted to save consumers money. His mission sounds altruistic enough, and I have even heard some describe his purpose as “philanthropic.” I have no bones to pick with a creative entrepreneur who has found a new way to make a buck. But please don’t mistake his for-profit enterprise as philanthropy.

His money-making model is pretty simple actually. According to his own website the company adds a generous 15% to the acquisition cost of the prescription drug, then charges a dispensing fee, then charges for shipping. So he gets a guaranteed 15% on his investment up front, with virtually no risk or downside. Genius. He then pays TruePill pharmacy to fill the prescription. How much does TruePill get of that 15% markup that Cuban obtained from the patient? Nobody knows. But it is always the pharmacy that ends up getting the short end of the stick in my experience. If I had to guess, they probably get cost plus 7%, while Mark pockets 8% for the transaction. I’ll take a net 8% business model every day of the week, and twice on Sundays.

The irony is that his website claims to eliminate the middleman. Well, he does…by becoming the middleman himself. The PBM has long been the notorious middleman in the pharmacy drug supply chain, pocketing millions in rebates and premiums, while reimbursing pharmacies so little that many end up going out of business altogether. Mark Cuban saw that model and appears to have been quite upset that he didn’t think of that first. So he has undercut the PBM, focusing just on cash patients, and has used his name and brand to drive market share in his direction. He’s not on shark tank by accident.

Again…nothing illegal here. Just an easy way to make a quick buck by brokering prescriptions for the pharmacy. Might patients save money with his model? Some will. But most would have discovered that a discount card could have done the same thing, without having to fracture your prescriptions between multiple pharmacies to save a few dollars. And if you happen to have a question about your prescription, don’t worry, your local pharmacist will always be there. Or will we?

If not, I suppose you can always call Mark Cuban, right?

Author: Jason Poquette

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