Why Mark Cuban Put His Name on a Pharmaceutical Company

Dallas Mavericks owner Mark Cuban plans to spend the next decades of his life talking about the mission to disrupt the pharmaceutical industry through the Mark Cuban Cost-Plus Drug Co. Of all the companies he’s been involved in, c is the first time he has lent his name to the company. That’s because this time around, he says, money isn’t the motivating factor. He wants to leverage his platform to boost Cost-Plus Drug and help people access affordable drugs.

These are just some of the thoughts Cuba shared with NPR’s Guy Raz on the podcast. How I built this lab, where past how i built this guests talk about their latest projects. The billionaire was one of the first guests on Raz’s original podcast. In his last interview, he talked about the mission and growth of his new Dallas-based pharmaceutical company.

The MCCPDC started with a cold email from Dr. Alex Oshmyansky. The radiologist wanted to disrupt the pharmaceutical industry but needed an injection of cash to scale his idea. Cuban was intrigued. “I’ve probably invested $100 million in people I’ve never met and I’ve done well with those investments,” Cuban told Raz. “Dr. Alex Oshmyansky is one of the smartest humans I have ever met.

Four years ago, Cuban began diving deep into the complicated world of pharmaceutical delivery, applying his trademark business empathy to understand the industry and how it might be disrupted. Oshmyansky spoke with CEO about the company and how it came about last year. “Our goal here is to bypass all the middlemen and sell it to patients as directly as possible with transparent pricing,” he said.

The MCCPDC plans to eventually manufacture its own drug at a 22,000 square foot facility in Deep Ellum. But it already offers hundreds of drugs directly to consumers at lower prices than patients could get using their insurance and copayments at traditional pharmacies.

So how does Cuba do it?

He told Raz that the usual phrase that drugs are expensive because of research and development is a half-truth. Much of the research and development is subsidized by the federal government. The real problem is the intermediaries who take their part between the manufacturers and the patient. Vertical integrated pharmacy benefit managers make deals with manufacturers, insurers and providers to get discounts on drugs, but Cuban says these organizations make drugs more expensive.

His company is paid entirely in cash and outside the insurance system, but cuts out the middleman and offers transparent pricing. When customers search for the drugs they need — Cuban told Raz that the MCCPDC hopes to supply 2,000 drugs by the end of the year — they can see the company’s costs and overall profit down 15% , which is used to reinvest in MCCPDC for future manufacturing.

There is room in the market for one company to undermine PBMs and traditional drug makers. But big players in the industry often acquire these competitors if they start gaining some market share. For entrepreneurs who must think of investors, employees and family, buyout offers are often hard to resist. Cuban does not have to bow to such pressures and aims to remain independent.

Robotic drug manufacturing facility in Dallas

The company operates as a for-profit, for-profit company where the public good is a core value and most of the profits are reinvested in the business. If the company starts earning hundreds of millions of dollars, Cuban said he would invest his profits in making more of his drugs or cutting prices, adding that it wouldn’t be possible to do what he does. he was doing unless he didn’t need to make money. “Sorry, kids; your inheritance will be reduced if it doesn’t work,” he joked to Raz. “But it’s so important to me.”

Cuban told Raz that he hopes the MCCPDC manufacturing site, which will be a robotic facility, will force drugmakers to rethink their processes to compete with its low prices. But there are dangers in taking on one of the nation’s biggest industries. (The Pharmaceutical Research and Manufacturers of America, Blue Cross/Blue Shield, CVS Health, and America’s Health Insurance Plans are among the nation’s top lobby spenders).

Cuban fears that the powers that be in the pharmaceutical industry will push for policy changes that will bankrupt his company. The other big hurdle? Get manufacturers to sell to him. If a large PBM tells a drugmaker that it will remove its drugs from its contracts and relationships with insurers and suppliers if it sells to the Cuban company, that could limit its ability to have an impact.

Cuban told Raz that right now the MCCPDC is too small for big PBMs to care much about their impact, but others are noticing. The Dallas Morning News reports a Annals of Internal Medicine study that found that if Medicare bought drugs from the Cuban company, it would have saved $3.6 billion in one year.

D Magazine also detailed the impact of the pharmaceutical company earlier this year. “Cuba’s online pharmacy sells generic drugs at manufacturers’ prices plus a fixed 15% markup. For example, mesalamine, a drug used to treat ulcerative colitis that retails for over $950, can be purchased for $36.90. The antidepressant fluoxetine (brand name: Zoloft; retail price: $22.94) retails for $3.90,” Alex Macon wrote in January.

While there are still plenty of challenges ahead for the MCCPDC, it would be nice if his company went bankrupt because others cut prices, Cuban told Raz. “At the end of the day, if the big guys slashed our prices, I’ll be happy as a clam,” he said. “So will millions of patients who are paying a fraction of what they were paying last year.”

Author

Will is the editor of CEO magazine and editor of D CEO Healthcare. He wrote about health care…

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