Mark Cuban’s Pharmacy: no real savings for patients
Some thoughts, since I’ve been asked…
Disclaimer: I’m typing this article on an iPhone.
I’ll begin by noting that while I have exchanged some unpleasant words with Mr. Cuban in the past, I have no interest in engaging in a personal attack on anyone. I wish him the best with this venture and hope he achieves whatever goals he has set out.
Many people have reached out to me for comment on this “drug company”. This is not a drug company, by the way. It is simply an online pharmacy, similar to DiRx, GeniusRx and GoodRx . I was intrigued by the claims of remarkable cost savings. I’ve found these claims to be largely false.
Case 1: Imatinib
Gleevec went generic years ago, and many competitors have entered. Redbook notes a bottle of 30 400mg Imatinib pills is available for as little as $130. Yet, this pharmacy advertises a $39 cost, not including shipping. Not surprisingly, GoodRx has Imatinib listed for the WAC cost of around $130. For a company promising transparency, I would include the average competitors price. This pharmacy is listing the old price of Imatinib from the brand company, which no one takes anymore. Therefore the ludicrous cost savings displayed is false advertising at best, and fraudulent at worst. Cuban’s pharmacy should display an apples-to-apples cost savings. So should GoodRx. Transparency, right?
Imatinib is a rarely used medicine. It is a “tier 1” generic, so the copay is usually $0-$5. Even if 25% of all patients in the US are underinsured (being quite generous), perhaps there are 3,000 people this pharmacy could serve. It would appear that serving this small patient population at a loss is more of a philanthropic than commercial interest, which I commend. I don’t see what the route is to profit, as the bulk of a pharmacy’s business relies on the high volume of more common medicines.
Claimed savings: 99%
Actual savings: 60%
Case 2: albendazole
This pharmacy’s website features albendazole as a product. $33 for 2 pills, once again, not including shipping or taxes. The same regimen is available from multiple pharmacies for $50, no savings at all when figuring in shipping. Albendazole is a rarely used anti-parasitic I actually once considered acquiring. You want to take this medicine ASAP, so it sounds like it’d be cheaper to just go to the pharmacy.
Claimed savings: 90%
Actual savings: 0%
Case 3: Average Joe medicines
I was beginning to get suspicious that this pharmacy has a few cherry-picked “loss leaders” to gain attention and the volume that is desperately needed to sustain a pharmacy business. Reselling generic medicines isn’t exactly a fat margin business.
MC Pharmacy’s Lipitor at $3.60 for 30 10mg is the same price as some retail pharmacies when including shipping costs. Wegman’s and Price Chopper are actually cheaper, while CVS and Walgreen’s are a bit more ($10) expensive. Amlodipine has a roughly similar price profile. Interestingly there are quite a handful of other online/mail order pharmacies that have extremely similar prices to MC’s.
Including shipping, MC Pharmacy’s metformin is more expensive ($8.90) than most retail pharmacies (Walmart $3, Walgreens and CVS $8.00).
Claimed savings: substantial
Actual savings: none
In general, retail pharmacy is a difficult business. Having to staff pharmacists interacting with physicians is expensive, renting high traffic locations and other expenses result in a plodding low-margin space. Online pharmacies don’t have the footprint costs but replace them with digital infrastructure and shipping costs. Expedited shipping on Cuban’s website is $15, which would further eat into cost savings of the few competitive situations I found, and simply make it more expensive than taking a trip to the pharmacy in most cases.
This business model is not new, and it sucks. On a percentage basis, most Americans are insured and pay nominal copays for most medicines. Paying cash for generics has been possible through several competitors of Cuban’s for some time now. I don’t see any special sauce or any special prices relative to those players, for the small segment of patients who are uninsured and don’t qualify for Medicaid.
It is not hard to get publicity when you’re Cuban. Publicity is easier than creating a lasting business, however. Years ago, Cuban’s new privacy messaging app, Cyber Dust, launched to similar acclaim. Could this be the “Snapchat killer”, one article enthusiastically wondered. I think after a year or two of operating reality, this pharmacy will not be profitable. Whether Cuban will keep it alive for his ego’s sake is up to him, but I see no real profit potential for him in the cutthroat world of pharmacy.