Mark Cuban

Cost Plus Drugs Company is selling prescription medications at dramatically low prices

BY JAMES MELTON

What would happen if drug pricing made sense to consumers?

Mark Cuban Cost Plus Drug Company, which launched its online pharmacy about a year ago, is trying to answer that question. Its approach is easy to understand—even if it’s difficult to implement.

First, CPD negotiates directly with manufacturers to get the best possible price. It adds a 15% markup based on the per-pill price that CPD pays to buy the medicines. Then, CPD adds a flat $3 pharmacy labor fee and $5 standard shipping to get to the total retail price.

Cuban believes strongly in CPD’s mission and business model. Among his many ventures, this is the first company to bear his name.

“I wanted everyone to know I was fully committed to taking on the incumbents in the pharmaceutical industry,” Cuban told Luckbox.

Under its model, the company says, prices to consumers can fall dramatically. For example, a 30-count supply of 400mg imatinib, a cancer drug sold under the brand names Gleevec and Glivec, costs $39 through CPD. That compares to as much as $9,657.30 elsewhere, the company says.

Besides transparency, CPD offers a social mission. The operation is a public benefit corporation set up to generate social and public good while also making a profit.

CPD has more than 1,000 SKUs in its inventory and adds new ones constantly. On Dec. 20, the company announced on social media the addition of 10 new drugs. And on Jan. 6, it announced six more.

“We hopefully will grow to more than 5 million accounts and save people hundreds of millions of dollars—if not more,” Cuban said.

He maintained that CPD will have “a huge impact on not just generics, but also brand drugs pricing” in 2023.

TWO QUESTIONS (OFF-TOPIC)

Of all your investments on ABC’s Shark Tank show, you lost the most money on the Breathometer—a device that used a smartphone to measure blood alcohol. What was your biggest success on the show?

I have a bunch. I was just visiting with BeatBox Beverages [which sells ready-to-drink cocktails in single-serve boxes]. I invested $1 million dollars at a $3 million valuation They just raised it to a $199 million valuation and are crushing it! [BeatBox Beverages had only $350,000 in sales before appearing on Shark Tank in October 2014. Since then, the company has surpassed $57 million in revenue.]

Are you open to running for public office?

No chance!

How Cost Plus Drugs Sets Prices

Here’s an example from the Cost Plus Drugs (CPD) website: CPD’s’ cost per-pill is 2.4568 cents. The company multiplies that number times 0.15 to determine a mark-up of 0.036852 cents per pill—and rounds up to the nearest cent.

In this example, the total per-pill price would be 2¢, plus 1¢, equaling 3¢.

The company multiplies the per-pill total by the number of pills in your prescription. It then applies the pharmacy and shipping fees, which adds another $8

In this case, a 90-pill prescription would cost: (3¢ x 90) + $3 + $5 = $10.70.

A Maverick’s Milestones

1983 Cuban forms MicroSolutions with Martin Woodall.

1990 CompuServe buys MicroSolutions for $6 million.

1995 Cuban and Todd Wagner found Broadcast.com.

1998 Broadcast.com goes public.

1999 Yahoo! purchases Broadcast.com for $5.6 billion.

2000 Cuban buys the Dallas Mavericks pro basketball team for $285 million.

2011 The Mavericks become NBA World Champions.

2011 Cuban begins appearing on ABC’s Shark Tank

2022 Cuban and Alex Oshmyansky launch Cost Plus Drugs online pharmacy, Capital Blue Cross becomes the first health plan in the nation to collaborate with CPD, and CPD partners with pharmacy benefits manager EmsanaRx.

–Sources: Bloomberg Billionaires Index, MarkCubanCompanies.com, MCCPDC press releases