Mark Cuban Launches New Pharmaceutical Manufacturer, Taking on Traditional Pharmacy Benefit Managers

Dallas Mavericks owner Mark Cuban is ushering in a new pharmacy era through his latest startup aimed to take down non-transparent pharmacy benefits managers.


Alex Oshmyansky, a Dallas radiologist whose frustration with the status quo of the pharmaceutical industry and the management of pharmacy benefits led him to one of the most significant entrepreneurial steps; sending a “cold email” to Mark Cuban.


Any entrepreneur's dream is to hear a “yes” from Mark Cuban and for him to open his pocketbook. Cuban has done just that with the founding of the Mark Cuban Cost Plus Drug Company.


The Problem


As it stands now, according to the Wall Street Journal, three pharmacy-benefit managers manage almost 80% of prescriptions in the U.S.: CVS Health Corporations CVS Caremark, Cigna Corporations Express Scripts, and UnitedHealth Group Inc.’s OptumRx. This phenomenon has seemingly stifled innovation in the space for pharmaceutical drugs and their pricing, giving the few big players tremendous pricing power.


Cuban’s startup, headed by Oshmyanksy, plans to launch a new online pharmacy selling 100 of the most prescribed generic prescription drugs at a 15 percent markup plus a $3 dispensing fee.


Pharmacy Benefit Managers


PBMs, pharmacy-benefit managers, who manage drug benefits for employers, health insurers, Medicare Part D prescription plans, and other payers, act as a middleman, with the purview of keeping drug costs down by negotiating rebates on the prices paid for drugs and process payments to pharmacies, with those negotiated savings passed on to customers. The concern is that PBMs fail to disclose the total amount of the rebates, keeping a significant amount of the savings.


Furthermore, PBMs work on behalf of employers, labor unions, and governments to decide which drugs are available to patients making them a significant market force.


A New Pharmacy Solution


The Mark Cuban Cost Plus Drug Company PBC and the Purchaser Business Group on Health, a nonprofit coalition of nearly 40 large public and private employers, are starting new pharmacy-benefit management companies to bring change to the industry and provide adequate and transparent savings. Cuban, the billionaire investor and Dallas Mavs owner, is funding the new company to offer transparent fixed-rate markup of these prescription drugs, creating an all-in-one pharmaceutical supplier streamlining manufacturing, distribution, and pharmacy services said to be operation by 2023, with the opening of the Texas facility in September 2022.


Currently, major companies are in a pilot phase to experiment with more transparent PBMs while remaining under their current business with larger PBMs. This phenomenon was highlighted by David Dross, drug pricing and policy leader at Mercer, a consulting unit of Marsh & McLennan Cos, as reported by the Wall Street Journal.


Lasting Benefits for the Future