Mark Cuban’s Cash Pharmacy Launches Amid Strong Competition

by Peter Johnson

Mark Cuban Cost Plus Drug Company (MCCPDC) launched its online, generic-dispensing pharmacy on Jan. 19, becoming the latest entrant into a burgeoning market of prescription drug retailers that operate independent of traditional pharmacy benefits. Health care insiders say that the amount of activity in the emerging segment is encouraging, but they add that no one player is likely to become dominant in the space.

Are the PBM’s transparency claims overstated?

• MCCPDC “is a fancy combination of Amazon’s approach and GoodRx in a one stop pharmacy that helps solve for [generics, which account for] about 15% of the total drug spend for a typical employer,” Brian Anderson, a principal at Milliman, Inc, tells AIS Health.
• “This approach is an avenue to improve pricing for low-cost items, but it does not solve for the administration side and what to do for specialty, limited disruption, and brand name products. Generics are currently the smallest portion of the overall costs, and lowering costs can provide a short-term Band-Aid but not a long-term solution,” Anderson adds.
• Ashraf Shehata, national sector lead for health care and life sciences at KPMG, tells AIS that MCCPDC isn’t necessarily a new idea: “This cash model is not a new model — we saw it with the low-price discounters, the retailers’ low-price generics. The second thing you’ve seen is the membership retailers, the big-box retailers also offer very aggressive pricing. I would say, at the end of the day, it’s a continuation of that trend.”

GoodRx, MCCPDC use different models

• However, Ge Bai, Ph.D., a professor at Johns Hopkins University’s schools of business and public health, tells AIS Health that she thinks MCCPDC does have some unique characteristics in comparison to its competition.
• GoodRx’s model “is to create competition across PBMs [for a consumer’s business] to achieve the best so-called cash price — which is actually the best network discount price,” she says. “But Mark Cuban’s model is a straight line, point-to-point. There’s no [inter-PBM] competition.”
• Bai also draws a contrast with Amazon Pharmacy, which is only open to Amazon Prime members or members of a contracted health insurance plan: “Amazon Pharmacy is also limited to generics. But Amazon Pharmacy, I don’t think they’re focused on patients not using insurance. I think they’re trying to carve into the market where patients are covered by their employer-sponsored plan and Amazon Pharmacy is a preferred provider.”
• But Shehata points out that the business model doesn’t matter to the consumer, who will pick a product on price. He says price comparison tools that display each contender’s price — placing MCCPDC and GoodRx next to a patient’s PBM-derived prescription drug benefit — may guide consumer choices in the future.

From Radar on Drug Benefits