Dallas Mavericks owner and venture capitalist Mark Cuban is taking aim at drug prices with his discount prescription drugs startup, Mark Cuban Cost Plus Drug Company. However, payers are divided on whether they want to work with the company, according to new MMIT research.
By leveraging direct sourcing, Cost Plus Drugs’ goal is to eliminate excessive markups on prescription drugs. Cost Plus’ online pharmacy sells directly to consumers, and the firm is registered as a pharmaceutical wholesaler with the FDA.
Coherus BioSciences plans to work with Cost Plus Drugs to make its biosimilar version of Humira available to consumers at a steep discount. In July, Cost Plus announced a partnership with Kroger that lets its customers pick up their prescriptions at all Kroger pharmacy locations across the country, adding to its expanding pharmacy network.
Despite its growing footprint, payers are split on whether they want to work with the company. Thirty-three percent of payers are very interested in partnering with Cost Plus Drugs, while an equal number, 33%, aren’t interested in partnering with the company at all, according to MMIT’s Rapid Event Primer survey conducted in July.
Concern over Cost Plus Drugs’ business model
Cost Plus Drugs’ business model is one of the reasons that the latter group is reluctant to work with the company, with one pharmacy director citing the company’s not using insurance and bypassing PBMs as the reason. Cost Plus actually does work with one insurance company, Pennsylvania’s Capital Blue Cross and a PBM, Rightway Healthcare Inc. Cost Plus struck contracting deals with the two companies in October 2022 so that Capital Blue Cross members can use their insurance cards at Cost Plus Drugs, while Rightway’s members have access to Cost Plus Drugs within its app. Cost Plus is looking to add more insurance plans in the coming months, according to its website.
Despite Cost Plus Drugs’ savings rate, which it estimates is between 50 to 90% , 33% of payers we surveyed were still not interested in a partnership. Meanwhile, 50% of payers surveyed would consider partnering with Cost Plus if cost savings amounted to 70%.
Cost to members and drug availability were partnership-defining factors for payers, with 67% calling member cost and 50% calling drug availability “very important” factors.
Potential for employers to push employees to Cost Plus Drugs
Sixty-six percent of payers we surveyed were slightly concerned, at most, over the potential for employers to push their employees toward Cost Plus Drugs. Payers felt that employers may not push the company on employees due to higher costs and limited drugs, the survey said. “I would consider that a good thing as we could then pressure our PBM to work with Cost Plus much easier,” one payer said.
Cost Plus Drugs’ non-inclusion of most insurance benefits remains payers’ primary concern. “[Cost Plus Drugs] only addresses cash patients and does not incorporate insurance benefits,” one payer said. “Pushing employees to use their company would only add confusion on the cost of their drugs, especially when they expect a flat co-pay for their drugs.”
As Cost Plus continues its quest to shake up the drug pricing model, for now, payers are still divided on whether they want to work with the company.
Access the full report and learn more about MMIT’s Biologics & Injectables Index here.