Mark Cuban on starting a new Cost Plus Drugs online pharmacy

mArk Cuban, the tech titan, owner of the Dallas Mavericks and star of ABC Shark tank, moves through the world like a friendly great white shark, all teeth and eyes and relentless movement. When we meet one October morning in his office at Mavericks headquarters, the serial entrepreneur, 64, is wearing a long-sleeved T-shirt advertising his latest investment: Mark Cuban Cost Plus Drug Co. I was there to find out why a guy who made billions in tech, won an NBA championship, and became perhaps the most popular businessman on reality TV, was spending his time and fortune selling generic antifungal drugs online for $7.34.

“To screw things up,” Cuban explains. “That’s what capitalism is. Capitalism is not just: “Everyone should make as much money as they can.” Capitalism is about finding solutions to problems and seeing what you can do to solve them.

Cost Plus Drugs, launched in January, is Cuban’s attempt to show that disruption can be a form of benevolence. The for-profit online pharmacy aims to undermine the healthcare industry by selling generic drugs for everything from asthma to glaucoma to rheumatoid arthritis for a fraction of the typical price. Cuban likes to say that the company’s true product is transparency: In an industry where hospitals can sell cancer drugs for a 600% markup, Cost Plus sells generics for the cost of manufacturing, plus a 600% markup. 15% and shipping costs. The goal, Cuban says, is to become America’s largest supplier of low-cost drugs.

While Cuban doesn’t say exactly how much of the company he owns, he calls the new online pharmacy a win-win. If established pharmacies continue to charge patients artificially high prices, Cost Plus could emerge as a popular low-cost alternative. If industry cuts consumer prices to compete, it will have almost single-handedly brought reform to a stubbornly resisting industry. “The incumbents could come and copy us, get a heart, get a conscience,” Cuban says. “Would be fine.”

For decades, politicians have promised to reduce the cost of prescription drugs, and for decades they have mostly failed. For Cuban, the persistent inability to address runaway drug prices has reinforced his poor view of the political system’s ability to solve big problems. He not only believes that the healthcare system is broken. He also thinks the US government is too screwed up to fix it.

For a guy who expresses himself through possessions and acquisitions (as well as the occasional podcast episode), Cost Plus Drugs represents a billionaire’s search for meaning in a world increasingly skeptical of the power of the ultra-rich. Cuban counterparts in the 0.01% became political mega-donors, started global foundations, became patrons of the arts and humanities. He prefers to build his legacy the way he built his fortune: through entrepreneurship. Cost Plus Drugs is something of a middle ground between progressive reform and philanthropic giving, aiming to disrupt predatory markets as a way to regulate them.

The firm still has a long way to go to turn around the $1.4 trillion-dollar pharmaceutical industry. Cost Plus Drugs offers about 1,000 drugs in the U.S., a small fraction of available drugs, and still doesn’t accept most insurance, though Cuban says that will change in 2023. While some customers say Cost Plus has lowered their medical bills, it’s too early to tell if the model can scale. “Mark Cuban has managed to disrupt a very small slice of the healthcare system,” says Larry Levitt, executive vice president of the nonpartisan health policy organization KFF, who has called out-of-pocket generics the “low fruit.” of the system. “It remains to be seen whether he can find a way to expand that slice.”

Cuban’s email address is publicly available and hundreds of investment proposals arrive in his inbox every week. He reads the first paragraph and deletes it 99% of the time, he says. But in 2018, Cuban received a frosty email from Dr. Alex Oshmyansky, a radiologist, asking if he would consider investing in a company that sells generic drugs for about the cost of manufacturing them. He replied within five minutes. “The more questions I asked him on the drug side,” Cuban says, “the more obvious it was that there was an opportunity there.”

A bubbly entrepreneur like Cuban might not be expected to be drawn to the world of generics. But long before Oshmyansky’s email hit his inbox, Cuban had been interested in inefficiencies in healthcare. He had noted the controversy surrounding “pharmaceutical brother” Martin Shkreli, who in 2015 raised the price of Daraprim, a life-saving antiparasitic drug, from $13.50 to $750 per pill. “If the pharma brother can raise prices, that means there is some price distortion,” Cuban says. “And there has to be a way to reduce them equally.” Watching President Trump and congressional Republicans work to eliminate the Affordable Care Act without a viable replacement, he adds, he convinced him that the two-party system was ill-equipped to manage health care.

Cuban pushed Oshmyansky, who launched the company as a nonprofit in 2015, to turn the venture into a for-profit company, arguing it would be more sustainable if it didn’t depend on fundraising. His luck has created a long runway, and his fame has enabled him to spread the word about an enterprise that might otherwise have languished in obscurity. “It’s not even so much Mark’s capital. It’s his celebrity that was the magic key that unlocked a lot of this,” says Oshmyansky. “Mark’s platform is actually much more valuable than the capital he can provide.”

The company has had some growth issues. Its staff of 33 has struggled to keep up with skyrocketing demand, even though the menu of drugs the company offers remains limited. (The sale of each drug requires complex negotiations with manufacturers and regulators, and Cost Plus Drugs does not yet offer drugs like insulin, misoprostol, or epinephrine auto-injectors for peanut allergies.) They are building a manufacturing facility near their Dallas headquarters to produce drugs on site, but it won’t be finished for months. Some customers have complained that their medications are taking too long to arrive or that customer service is slow. Cuban says these are the growing pains of a skeleton crew trying to service more than 1.3 million accounts.

Other customers say that Cost Plus has already helped them. Andrew Hums, a 37-year-old auto salesman in Pennsylvania, says he saved more than $600 on a three-month prescription for an assortment of diabetes and blood pressure medications. “This is more than a car payment for most people,” he says. “For some people, that’s the rent.”

Cuban, who is worth an estimated $4.6 billion, says he’s not there to “earn my next dollar.” Neither he is interested in a run for political office, despite longstanding rumours. “That’s the one thing I know I’d suck at,” he says. Instead, Cost Plus Drugs is part of a playbook to use his luck for a new kind of benevolent interruption. “I could move on to the next thing, and the next thing and the next thing,” he says. “But it wouldn’t be like a politician; he would be like a capitalist.

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