Mark Cuban on prescription drug costs and PBM reform

Mark Cuban says it is critical for government officials to consider and understand the hierarchy when it comes to the prescription drug market and evaluating and setting drug pricing laws.

“For me it’s all about transparency. In the drug market and across healthcare, the lack of transparency allows the largest players to influence pricing and effectively find arbitrage points,” Cuban said MobiHealthNews.

“Without transparency, intermediaries can, for example, enter into contracts with companies and government-approved drug programs in which they say they will take full advantage of the rebate for a particular drug, but purchase the drug from a subsidiary that keeps a significant portion of the revenue .

Cuban said that, for example, the subsidiary buys at an 80% discount and then sells to the pharmaceutical broker for a 60% discount, meaning the subsidiary keeps 20% of the cost of sales, “but it gives the PBM the opportunity to say, that she passes on 100% of her discounts.”

The entrepreneur and founder of Mark Cuban Cost Plus Drug Company (MCCPDC) says he is supporting Vice President Kamala Harris in the upcoming presidential election because she has publicly advocated for PBM reform and promised to hire non-pass-through pharmacy benefit managers (PBMs).

PBMs are third-party administrators of prescription drug benefits for self-insured employer plans and commercial health insurers, Medicare Part D drug plans, and other payers.

Cuban has has long argued that the role of PBMs must change to reduce prescription drug costs, explaining in 2022, the year MCCPDC was introduced, that “the middlemen,” namely group purchasing organizations, or PBMs, may be the reason why that the prescription prices are higher than the market value.

Accordingly Commonwealth Fund PBMs have a significant impact on determining the total cost of medications for insurers, thereby determining patient access to medications and determining how much pharmacies are paid.

“Harris is the only candidate who has said she will take over the non-pass-through pharmacy benefit managers and introduce transparency, which I believe will lower the cost of medications for everyone in the private and public sectors,” Cuban said.

Still, it takes more than one elected official to curb prescription drug costs, and Cuban says very few officials fully understand the complexities of the Rx drug market.

“The pharmaceutical industry should be very simple. Someone has a drug approved. Doctors prescribe it. The pharmacy, having purchased the drug from a wholesaler, sells it to the patient, who either pays directly or has their insurance or employer pay for it.” “It should be that easy.” “There's absolutely nothing difficult about this one industry,” Cuban said MobiHealthNews.

“Instead, there are many fingers in the pot, increasing complexity, acronyms and costs. It's costing Americans, as far as I can tell, at least 20% a year in drug prices that are higher than expected, if not more.”