"Always 15%" — When Shark Tank's Mark Cuban took on big pharmacies with transparent pricing

Mark Cuban, Shark Tank investor and minority owner of the Dallas Mavericks, has positioned himself as a challenger to the traditional pharmaceutical pricing model through Cost Plus Drug Company.

During an interview on The Daily Show with Jon Stewart on August 13, 2024, Cuban highlighted the core principle of his business, stating,

"You go to CostPlusDrugs.com, and you put in tadalafil, or whatever, first thing we do is we show you our cost. Then we show you our markup, which is always 15%, and everybody gets the same price because we're mail order to start."

The Shark Tank investor's company aims to eliminate hidden costs and markups associated with prescription drugs by providing transparent pricing.

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Shark Tank Mark Cuban’s Cost Plus Drug company challenges traditional pharmacy pricing

The role of Pharmacy Benefit Managers (PBMs)

Cuban emphasized that a major issue in drug pricing is the role of pharmacy benefit managers (PBMs), who act as intermediaries between drug manufacturers and pharmacies. He explained that PBMs negotiate drug prices on behalf of insurers and large employers but do so without transparency. The Shark Tank investor stated,

"The problem was, there's this thing called pharmacy benefit managers, right, and they're basically responsible for doing the negotiating with, to a certain extent, Medicare, but with all the large employers."

Mark Cuban explained that confidential negotiations let PBMs control drug prices without accountability. His company challenges this by publicly listing prices for transparency.

"If we publish our price, boom, the whole world's going to change," he explained.

The Federal Trade Commission (FTC) has since scrutinized PBMs, using Cost Plus Drug Company’s pricing data to assess industry practices.

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Addressing high prescription drug costs

Cuban provided specific examples of medications with significant price disparities. He cited imatinib, a chemotherapy drug, which he claimed was priced at $2,000 in major pharmacy chains but could be purchased for under $30 through Cost Plus Drug Company.

Similarly, he shared the case of droxidopa, a medication that cost a friend $30,000 every three months without insurance. Cuban stated,

"I’m like, let me just check to see if we can get it. $64 a month, and the price has gone down since, all because we were transparent."

The Shark Tank investor further explained how his company’s pricing model disrupts traditional pharmaceutical costs, stating,

"There are others that are called pass-through PBMs that show you all your claims, show you all your data, show you all your pricing that do it for a fraction of the price."

These cases illustrate how his company seeks to reduce financial burdens on patients by offering lower-cost alternatives.

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Expanding Transparency Beyond Medications

Beyond prescription drugs, Cuban indicated plans to extend transparency to other areas of healthcare pricing. The Shark Tank investor revealed that Cost Plus Drug Company was beginning to publish contracts related to medical services, stating,

"Never before has it been done where, for my companies, we're saying, if you want to do business with us, if this hospital system wants to work with my companies, whatever it may be, we're going to publish them and put them online for anybody to see all of our pricing."

This approach, according to Cuban, aims to remove price disparities between hospitals and providers. He referenced scenarios where healthcare costs varied widely based on location, with one hospital charging significantly more for the same procedure compared to another facility nearby.

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Stay tuned for new Shark Tank episodes on ABC every Friday at 8 PM ET, with episodes available for streaming on Hulu.