Mark Cuban's CostPlus Drugs Company (MCCPDC) is grabbing attention among patients, providers, and researchers alike for its transparent cost structure and low prices. The business model is simple: an online pharmacy that sells generic drugs for cash pay, with a $3 pharmacy dispensing fee, $5 shipping fee, and 15% mark up across all drugs.
The company has grown at a rapid rate, starting with about 100 available generics in January 2022 which had grown to over 700 generic drug options by June. They plan to grow to more than 1,500 medications in the next six months, as well as adding both single source brand drugs and specialty biologics to their pharmacy.
The numbers don't lie—this model often results in substantially lower prices. A new study published in Annals of Internal Medicine found that Medicare could have saved as much as $3.6 billion in one year if they purchased select generic medications from MCCPDC. If Medicare Part D plans matched MCCPDC prices for 77 of the 89 generic drugs included in the study, 37% of Medicare's 2020 drug costs could have been avoided.
These numbers are compelling—and even motivated Mark Cuban to reach out to government leaders such as President Joe Biden via Twitter to "get this done." But the numbers also don't give the full picture.
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For Medicare patients, this headline could ring some warning bells about the value they are getting from their Medicare Part D benefits. Are they paying more for their medications than they should be? Maybe so. But the issue is more complex than cost alone, for a few reasons.
1. Traditional pharmacies and Part D coverage provide more services than just dispensing pills
In 2019, the average number of prescriptions per Medicare Part D beneficiary was 54 per year. Patients may find value in having one pharmacy that can sync up refills and look across all of their medications to make sure that there are no contraindications for new drugs.
In addition, many Part D plans also offer medication therapy management programs, which can ensure that patients' medications are appropriate and can even help patients to reduce their number of medications and better manage side effects. These services are not provided by MCCPDC.
2. Community pharmacies play a role in supporting independence for seniors
For some seniors, a trip to the pharmacy is more than just a transaction, it's also an opportunity to check in with someone who cares about them. And using their community pharmacy gives them confidence that they will be able to get the right medication when they need it. Switching to an online pharmacy may mean that they must rely on a friend or relative to manage their medications.
3. Part D plans are designed to cover all of a patient's medications, not just their generics
Sixty percent of Medicare Part D's spending in 2019 can be attributed to 250 top-selling, brand name drugs with one manufacturer and no generic or biosimilar competitors.
For a patient who has a high-cost specialty or brand medication, not only are these medications not currently available through Mark Cuban's pharmacy, but purchasing cash-pay medications outside of Part D may mean that a patient ultimately takes longer to reach their deductible or out-of-pocket maximum and may ultimately spend more.
4. 90-day prescriptions drive significant savings, but may not work for everyone
The authors of the study noted that the greatest savings from MCCPDC came from 90-day prescription purchases that cut down on distribution fees. For seniors that feel well-managed with a 30-day prescription, they may be uninterested or unwilling to switch—especially if doing so disrupts their established medication regimen.
Congress got close to passing significant Medicare Part D reform in the 2021 Build Back Better (BBB) bill, including legislation that would grant Medicare negotiating power for select drugs. While these reforms have not moved forward since the BBB stalled in the Senate, they did have bipartisan support. In short, the government is aware and even prepared to make changes to Medicare drug purchasing, but it's unlikely to require patients to purchase generics from a cash pay, online pharmacy anytime soon.
Instead, it will be up to individual patients to decide, based on their own situation, whether they want to save money by switching their pharmacy to the MCCPDC or maybe even skimp on their Part D coverage altogether. However, as MCCPDC continues to shine a spotlight into the shadowy world of drug pricing, they are likely pushing plans to account for their markups and prices more aggressively. Mark Cuban's biggest impact on drug costs may come through the questions he raises even more than the prescriptions he fills.