Episode summary
Mark Cuban on the Broken Drug Pricing System & How PBMs Really Work | The Real Eisman Playbook Ep 50
The Real Eisman Playbook
· · Hosts: Steve Eisman · Guests: Mark Cuban
Summary
Mark Cuban argues that U.S. prescription drug pricing is broken because patients usually face the full retail price during the deductible phase, while pharmacy benefit managers, or PBMs, sit between insurers, employers, manufacturers, and pharmacies and capture rebates that rarely reach the consumer. He says the system is opaque by design, with PBMs setting formularies, steering volume, and helping create prices that are often disconnected from actual cost. Cuban also argues that hospitals and providers get pushed into the role of subprime lenders when patients cannot afford deductibles, which he says distorts the whole healthcare chain.
Cuban describes Cost Plus Drugs as a transparent alternative: the company publishes a price list, sells mainly generics and biosimilars, and marks drugs up by 15% over cost. He says the company launched on January 19th of 2022, has served millions of people, and now carries roughly 5,000 SKUs, or about 2,300 drugs. He also says insurers and PBMs can block access to Cost Plus by pressuring manufacturers not to work with it.
Beyond drugs, Cuban explains Cost Plus Wellness, a direct-contracting model for employers and providers that eliminates deductibles and out-of-pocket costs for employees, and he says the approach is already being copied through shared contracts. He closes with a cautious market view, saying fundamentals are less important than supply and demand and that he is holding more cash because of geopolitical uncertainty.
Key takeaways
- Mark Cuban says PBMs dominate U.S. drug pricing by controlling formularies and capturing rebates that sick patients effectively pay for during deductible periods.
- Cuban says Cost Plus Drugs publishes its price list and charges the same markup to every patient, with prices changing only when the company’s own cost changes.
- He says Cost Plus Drugs launched on January 19th of 2022, has served millions of customers, and now offers about 2,300 drugs across roughly 5,000 SKUs.
- Cuban says insurers and PBMs can pressure manufacturers not to work with Cost Plus, limiting access to brand-name drugs.
- Cuban says Cost Plus Wellness uses direct contracts to eliminate deductibles and out-of-pocket costs for employees while paying providers on time and in full.
- On markets, Cuban says fundamentals are “dead” and that he is holding more cash because geopolitics create too much uncertainty.
Notable quotes
“His solution is to sell prescription drugs at cost plus 15%. Which is a huge discount from everyone else's price”
“The problem is people are okay with their doctors and trusts their doctors and nurses. But when it comes to the economics of health care, everybody hates it”
“the insurance companies aren't just insurance companies. The insurance companies own all these other companies in including the PBMs”
“Our prices only change if our cost changes”
How the episode opens
Hi, this is Steve Eisman. Today I'm going to interview Mark Cuban about the healthcare industry and his private company cost plus. Mark created Cost Plus to tackle a specific problem, the runaway costs of pharmaceuticals, meaning prescription drugs.
His solution is to sell prescription drugs at cost plus 15%. Which is a huge discount from everyone else's price. As far as I can tell, Cost Plus provides the lowest prices for drugs.
I will ask him for his insights into the perverse incentives in our health care system and why pharmaceutical prices in the United States are just way too high. This is the third of my interviews focusing on what's wrong with our healthcare industry. Last fall on September 22nd, I interviewed Michael Ha of Baird for a deep dive into health insurance and why it fails to adequately insure people.
On January 12th of this year, I interviewed Warris Bkari, CEO of a private company called Claimable, and we explored how health insurance companies fail the people they are supposed to care for by denying way too many claims. Warus gave voice to people suffering and dying because of denials. Today I think we are going to learn a lot about how Mark is helping people by lowering drug costs and creating transparency.
I also want to ask Mark about Shark Tank and the Mavericks and ask him what he learned about those experiences. And after the interview, I'll be back to summarize what I think were the most important points. Hey, this is Steve Eisman and welcome to another edition of the Real Eyesman Playbook.
And today we're going to talk health care and we're going to talk health care and the incredible problems we're having in this country with drug pricing with a very special guest who everybody knows, Mark Cuban.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- drug pricing
- pbm pricing
- healthcare system reform
- cost plus drugs
- market lessons
Companies and tickers mentioned
- Cost Plus Drugs
- Cost Plus Wellness
- Dallas Mavericks
Watch the episode
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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The Real Eisman Playbook, this episode and its artwork belong to Steve Eisman. Octagon is not affiliated with the show; this page is an independent summary.
