A recent poll shows that most Americans say the country’s health care system is handled poorly, and even more are frustrated by the cost of prescription drugs. These frustrations are growing more common among people living in a nation where health care spending topped $4.1 trillion in 2020 — almost a fifth of the country’s gross domestic product — but health indicators like life expectancy and infant mortality are falling behind those in other industrialized nations.
Getting access to health care often is tied to employment and income, creating an inequitable system where millions are left uninsured or with inadequate health insurance coverage. As the Commonwealth Foundation reports, half of lower-income U.S. adults say that costs prevented them from getting needed health care, compared to a quarter of higher-income adults. (In comparison, in the United Kingdom only 12% of people with lower incomes and 7% with higher incomes reported financial barriers to care.)
These issues aren’t new and continue to attract attention from elected officials who are getting an earful from their constituents who face increasingly high insurance premiums or out-of-pocket costs for care. The recently approved Inflation Reduction Act includes provisions to lower prescription drug costs for people with Medicare and reduce drug spending by the federal government.
It’s an industry long driven by research and development, as companies develop and market new and better drugs — a pricey process. But some entrepreneurs and business leaders see an opportunity to remake this industry and do business better, helping customers while making a profit. Among the up-and-coming disruptors is Mark Cuban Cost Plus Drug Company, which aims to improve access to medications and help address the growing cost of health care in the United States.
You may know him from Shark Tank or the Dallas Mavericks, but he is also partnering with Cost Plus CEO Alex Oshmyansky to expand affordable access to medication. Launching its online pharmacy at the start of this year and operating as a registered pharmaceutical wholesaler, Cost Plus says it cuts out costly layers to offer prices at manufacturer costs plus a flat 15% margin and pharmacist fee.
“It’s a very simple plan. On the patient side, when patients save money on their medications they tell others in similar situations. The word spreads through patients, doctors, associations, and social media. That is our marketing,” he says. “The same applies to commercial sales. When we can provide hard-to-buy, expensive injectables at affordable pricing, word spreads in the industry. We think we can be efficient enough with our new factory to scale while providing great pricing.”
To reinforce the company’s mission to improve public health and operate transparently, Cost Plus is structured as a public benefit corporation. With that internal commitment to social benefit as well as the bottom line, Cost Plus hopes to separate itself from others in the medical industry. “People don’t trust healthcare institutions to be fair. Pricing in particular is very opaque,” Cuban says. “We turn that perception upside down by showing our drug costs and markups. Every company has to make up their mind and determine what their goals are.”
With a business model based in transparency, Cost Plus hopes to reinforce its goal of remaking the system and using business as a force for positive change. Helping companies reduce their employee health insurance costs means those businesses can use that money for other innovations and drive economic growth, Cuban says.
“Because we are transparent, buyers can work backward to determine if the prices they pay are fair,” he says. “We can work directly with those self-insuring companies, insurance companies, and government organizations to reduce their costs.”