DALLAS (CBSDFW.COM) — Who decides how much you pay for prescription drugs? This is a question with a very complicated answer. Now, Mavericks owner Mark Cuban hopes to simplify the process and save you money by opening his own pharmacy.
“Everyone knows someone, or they’ve been through it themselves where they had to choose between rent, food, or rationing their medicine,” Cuban said. “And that’s just crazy in the United States of America in 2022.”
Cuban helped launch Cost Plus Drugs in January. It is an online pharmacy without a storefront that offers more than 1,000 generic drugs. The business model is based on transparency. Each drug profile shows how Cost Plus determines its price: cost plus a 15% markup, $3 pharmacy fee, and $5 for shipping.
“We have people coming up to us and saying ‘your price is $10, my copayment is $20,'” Cuban said. “‘So I’m ignoring my insurance and coming straight to you.'”
Cost Plus does this by negotiating directly with drug manufacturers and cutting out the middleman. “There’s a third party – the pharmacy benefit managers.”
Here’s how it works: insurers hire pharmacy benefit managers to manage the pharmacy benefits of their health insurance plans. The PBMs draw up lists of drugs covered by the insurance. These lists, called formularies, generally contain the drugs most recommended to patients.
Manufacturers want their products to be recommended, so they often offer rebates or rebates to PBMs as an incentive. PBMs will pass on some of that rebate to insurers, but it’s unclear exactly how much.
PBMs also negotiate payments to pharmacies and collect the co-payment you pay when getting your medications.
This graph shows the flow of money, products and services that takes place before you get to the pharmacy counter.
There is another layer to all of this. For decades, PBMs were independent companies, but over the past decade they have merged with others in the healthcare industry. Nowadays, in many cases, PMBs, insurers and pharmacies are all owned by the same company. According to the Center for Insurance Policy and Research, the nation’s three largest PBMs handle prescriptions for 89% of the market.
State Rep. Cody Harris says that’s a problem. “There’s no doubt to me it’s a monopoly now.”
Rep. Harris authored HB 1919, a new law that prohibited PBMs from referring patients to their own pharmacies. He says when companies charge other pharmacies more to fill the same prescription, it reduces choices for patients. “A good example [of steering] would be if the PBM said, ‘if you buy this prescription from us at our pharmacy, we will charge you $2. But because we own the health plan and we decide how much we pay for this drug, if you go anywhere else, you pay $10.'”
Harris says the law was intended to increase transparency and competition by giving patients more choice. But the Texas Association of Health Plans – a reviewer of HB 1919 – says it had the opposite effect.
“I would consider this anti-competitive,” said Blake Hutson, a spokesperson for TAHP. “You know, you really should be able to steer people towards the cheaper option. That’s all patients really care about.”
Rep. Harris said a social media campaign had already begun to push for changes to HB 1919 in next year’s legislative session. His office provided screenshots of announcements claiming the law increases patient co-payments. One of the ads is by the Texans group for Affordable Rx.
When CBS11 tried to contact the group, we were directed to the Pharmaceutical Care Management Association, a Washington, DC-based organization that represents PBMs across the country.
PCMA did not accept an interview but sent us a statement which included the following:
“To achieve the shared goal of lowering prescription drug costs for patients, it is essential that the Texas regulatory environment encourage innovation across the entire prescription drug supply and payment chain. Enacting new mandates that restrict cost-cutting tools is counterproductive and only increases costs for patients.”
Read the full statement below.
One thing Harris and Hutson can agree on: Cuban pharmacy is a good thing.
“What I like about Mark’s model is that it’s market-driven and transparent,” Harris said. “That’s exactly what we were trying to accomplish in HB 1919.”
“We’re 100% for more competition and more innovation,” Hutson said. “People want cheaper drugs and anything on the market that achieves that for patients and employers is great.”
Cuban says if you don’t see your prescription on the Cost Plus website, you can send it to them as a suggestion. He hopes to add brand name drugs in the coming months.
“We have a very simple mission: to be the provider of low-cost medicines. Period. End of story.”
PCMA full statement:
“On behalf of Texas patients, Pharmacy Benefit Managers, PBMs, work to reduce prescription drug costs, expand drug access and improve patient outcomes.
The PBM market in Texas and across the country is very diverse and competitive. In fact, there are 70 PBMs currently active in the US market and six PBMs have opened since 2019, an increase of 10%. It is also important to note that employers, public programs are free to change PBMs at any time, or not to use one.”.
To achieve the shared goal of lowering prescription drug costs for patients, it is essential that the Texas regulatory environment encourage innovation across the entire prescription drug supply and payment chain. Adopting new mandates that restrict cost-cutting tools is counterproductive and only increases costs for patients.”
PCMA’s research on the PBM market can be viewed below: