379: How Mark Cuban plans to ‘f— up’ health care

What It Covers

Mark Cuban discusses his Cost Plus Drugs company's mission to disrupt pharmaceutical pricing through transparency and direct-to-consumer sales. He explains how PBMs control drug access through formulary leverage, why brand manufacturers avoid working with him, and announces biosimilar offerings like Stelara at drastically reduced prices compared to traditional channels.

Key Questions Answered

• •PBM Rebate Economics: Sickest employees effectively pay for employer rebates because PBMs charge full list prices during deductible phases, then share rebate savings with employers. Without drug utilization, no rebates exist, meaning patient illness directly funds employer revenue. This creates perverse incentives where companies profit from employee sickness rather than optimizing patient costs.
• •Brand Drug Barriers: PBMs threaten pharmaceutical manufacturers with formulary exclusion or tier downgrades if they work with Cost Plus Drugs on brand medications. Manufacturers cannot provide written evidence of these threats, making FTC enforcement difficult. This leverage controls hundreds of millions of covered lives and prevents direct-to-consumer competition despite manufacturer interest in alternative distribution channels.
• •Biosimilar Pricing Strategy: Cost Plus Drugs sells Hikma's Stelara biosimilar for approximately 1,280 dollars annually versus over 100,000 dollars for brand Stelara. The company updates pricing nightly through APIs, automatically lowering consumer prices as volume increases while maintaining consistent markup percentages. This transparency allows employers to use published prices as reference points when negotiating with traditional PBMs.
• •Direct Contracting Model: Cost Plus Wellness negotiates direct contracts with 9,000 healthcare providers, eliminating deductibles, preauthorizations, and payment delays for employees. Providers receive cash payment upfront at negotiated rates. The company publishes all contracts publicly so any employer can replicate the arrangements, creating network effects that drive prices lower as adoption increases across multiple companies.
• •Gene Therapy Access Model: Cuban proposes subscription-based funding for million-dollar cell and gene therapies, where families pay small annual fees per child into escrow accounts. This insurance-like model pools risk across many families who likely never need treatment, creating accessible funding for the rare cases requiring expensive therapies. He personally wrote an 1.8 million dollar check for twin infants when traditional coverage failed.