“Everyone should have safe affordable medicines with transparent prices,” says billionaire entrepreneur and Shark Tank star Mark Cuban. That’s the mission of Cuban’s new CostPlus Drug Company, which delivers all its medicines with a transparent, uniform pricing markup.
Cuban puts the value proposition as simply as possible, writing: “If you need to buy generic drugs, sign up and try our pricing. EVERYTHING we sell is cost plus 15%.” CostPlus is a company “on a mission,” according to Dallas Morning News editor John Gravois (see tweet below).
Cuban using his financial power and entrepreneurial know-how to help people with prescriptions is getting positive early reactions online. But delivering affordable drugs is not just altruism on his part. It’s also a very good business to be in, which is doubtless another of Cuban’s considerations.
Approximately 89% of drug prescriptions in the US are filled by the generic option each year, according to the AAM (Association for Accessible Medicines). So while many patients will still struggle to pay for name brand drugs that remain under patent protection, nearly NINETY PERCENT of patients could get eventually some financial relief through CostPlus. That’s a pretty attractive market share.
And if the brand v. generic prescription trend continues, it could get even larger. In 2005, according to drug data available at Statista, brand name drugs made up 40% of filled prescriptions, a figure that has dropped to around 10% as more drugs have come off protection.
If you need to buy generic drugs, sign up and try our pricing. EVERYTHING we sell is cost plus 15%. https://t.co/jYSNkP6CwT https://t.co/Z8cTGnw9oO
— Mark Cuban (@mcuban) January 20, 2022
Multiple uninformed commenters on Twitter reveal a concern that the CostPlus business model would undermine the R&D budgets Big Pharma relies on to develop new drugs. But the revenue stream that patented drugs provide to their developers is totally unaffected by CostPlus’s mission. What CostPlus does is cut out the middleman and add pricing transparency to generics. CostPlus is a logistics solution.
Even the name of the company demonstrates its value proposition. CostPlus delivers the drugs with a 15% commission for its work. It’s their cost, PLUS their commission. End of the pricing story.
