Mark Cuban on High Drug Prices, Taxing Billionaires, and 2028

Pivot - New York Magazine

In this episode of Pivot, Kara Swisher interviews Mark Cuban, entrepreneur and co-founder of Cost Plus Drugs, about his views on prescription drug

Key takeaways

• Biosimilars have significantly reduced the cost of high-priced injectable drugs like Humira and Stelara, driving down prices more than policy alone.
• Medicare's ability to negotiate drug prices under the Inflation Reduction Act has led to lower out-of-pocket costs for patients, though it increased premiums.

Main topics

• Prescription drug pricing and affordability
• Impact of biosimilars on pharmaceutical costs

Notable quotes

"Biosimilars came out, and that pushed the price... from $128,000 a year to $365 plus shipping every couple months."

Conclusion

Mark Cuban argues that real progress in lowering drug prices comes from market forces like

Transcript preview

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Odoo replaces multiple expensive platforms for a fraction of the cost. That's why over thousands of businesses have made the switch. So why not you? Try Odoo for free at odoo.com. That's O-D-O-O dot com. Speaker 7 (1:15) The Speaker 5 (1:16) city moves fast, but your vibe, that's different. Sharper, smoother, more alive. Speaker 7 (1:26) The new Speaker 5 (1:31) Honda City isn't just made to drive, it's made to feel. The new Honda City, all new vibe. Speaker 4 (1:40) Fortunately, usually they say they'll eat me last, right? You are Speaker 6 (1:42) the favorite billionaire. Speaker 4 (1:44) Yeah, one of them. Although Speaker 6 (1:45) you would be delicious, I will say. Elon would be gamey. Hi, everyone. This is Pivot from New York Magazine and the Vox Media Podcast Network. I'm Kara Swisher. And once again, it is... God, three Augusts. Speaker 6 (2:05) I so never get tired of that. And while Scott continues his August adventures, who the fuck knows where he is, I brought on yet another guest host to make him jealous. This is my goal. It is Mark Cuban, entrepreneur and co-founder of Cause Plus Drugs. He's here. Good to see you, Mark. Speaker 1 (2:21) Always good to be seen by you, Cara. It's always a pleasure. Speaker 6 (2:24) Thank you. You had a problem with my shirt? It's M for Mark. It's M for Mark. Speaker 1 (2:30) Yeah, I know better. Do Speaker 2 (2:31) you Speaker 1 (2:31) want me to tell you my Michigan story? Please. Speaker 2 (2:34) My son goes there. Speaker 1 (2:35) You Speaker 2 (2:35) know that. And Speaker 1 (2:36) why I cannot stay in Michigan. Speaker 2 (2:38) Oh, my son loves it. Speaker 6 (2:40) But go ahead. Speaker 1 (2:40) So in any event, maybe three years ago, I had this guy pester me online. I want to sell you the website, GoBlue.com. Oh. And Go Blue, obviously, is big in Michigan. Yes, it is. Speaker 3 (2:54) I Speaker 1 (2:54) don't want it. He wanted all this money. And finally, he lowered. He won like hundreds of thousands of dollars. And finally, I said, no, no, no. And he lowered the price to $38,000. And I was like. OK. And the reason I said OK is for two reasons. One, I invested in this company called Campus Inc. that does NIL licensing. So, you know, big college, college, high school, college basketball, football stars. They sell merchandise and everything and they do it for Indiana University. And Indiana was playing Michigan in a football game. And I was going on the introductory football event that they have, which is really huge, right? And so the whole pregame thing. And so what I did was I bought it and I redirected Go Blue. to Indiana's NIL page. And then I went on there and I said, you know, in the sake of a good rivalry, I have Go Blue and you all should go check it out. And I went to the Indiana page and they sold a ton of Indiana merchandise. So that's not the story. So the story is I get an email from their general counsel at the University of Michigan. Oh, good. And also at the time. Deservedly. And also at the time, the president of Michigan. And he was like, no, this cannot happen. That's our trademark. I'm like, okay, give me $38,000, buy it back, and we're done. He's like, no, we'll sue you. Just give it back to us for free. Yeah, okay. Speaker 6 (4:22) I'm like, it's a parody. I'm allowed Speaker 1 (4:23) to do a parody, right? It was fun, and it's no big deal. He's like, nope, give it back to us or we're suing you. I'm like, okay, I'm going to give it back to you. But let me just tell you something. I have a big platform. And Speaker 4 (4:37) every single time I get the chance to talk about how fucking stupid the University of Michigan is and how stupid you are as Speaker 1 (4:45) president, I am going to take advantage of it and get more than my $38,000. Here we Speaker 6 (4:49) are again. Again. For Speaker 1 (4:51) like Speaker 6 (4:51) the Speaker 1 (4:51) 900th time that I'm discussing it. Oh, this is Speaker 6 (4:53) great. I've never seen anything like Michigan. I wear a Michigan dad hat and I get stopped a lot. Try wearing Speaker 4 (4:59) an Indiana dad hat. Oh, Speaker 6 (5:01) really? Oh, I don't think I can. My son would kill me. He would kill me. Speaker 4 (5:05) Exactly. Are you Speaker 6 (5:07) an Indiana dad or you just have the hat? Speaker 1 (5:09) No, no, I went to... Yeah, I Speaker 6 (5:11) know you did, but you're not an Indiana dad. No, my kids, Speaker 1 (5:13) I wouldn't let them go to school there now. Speaker 6 (5:14) Why? Speaker 1 (5:16) Because the legacy is just too strong. Too strong? Too much. Too strong? I want them to blaze their own path. Speaker 6 (5:22) How are you doing? How's your summer going, Mark? Speaker 1 (5:23) Everything's good. Yeah, no complaints. It was my daughter's birthday yesterday, so ate too much cake, got no sleep. You know, just the usual, hanging out with the family. You know, it's been nice. Speaker 6 (5:34) Do you have any go-to vacations? I see you're not on a yacht in Greece or something. No, I'm not the type. You Speaker 1 (5:39) don't strike me Speaker 6 (5:39) as that guy. Speaker 1 (5:40) No. And plus with our kids, or two of the three is still in school. So we'll go to Laguna Beach and hang out there. You know, we'll take a trip to Europe or something just to do something different. I was in Paris and it was right in the middle of the heat wave. I was too. Oh my God. Oh my Speaker 6 (5:54) Madonna. That was crazy. That was a crazy heat. And they're not used to it. Speaker 1 (5:59) No, no. And I mean, the aesthetics are more important than the health. They want those buildings to look like they're from the 16, 17, 1800s. And you're not going to be able to do like they do in New York and put an external AC or window AC or anything. And so it was brutal. Speaker 6 (6:15) Brutal. And then the place I stayed, I got an Airbnb. They had one fan. And I said, do you have two fans? They're like, no, we have one. And I was like. I have to kill someone like immediately. Speaker 2 (6:25) But anyway, we've got a lot to get to today. I texted you and said, what do you want to talk about? You said health care, health care, health care. So we are going to focus on health care. But there's Speaker 6 (6:32) a Speaker 2 (6:32) few other things. But first, let's talk health care. Prescription drug prices had their biggest year over year drop in more than 60 years. President Trump is taking a victory lap for that. While his Trump Rx site, which is your company, Cost Plus Drugs, is partnering with may be a factor. But experts say a Biden era policy requiring Medicare to negotiate. drug prices is more likely driving costs down. You got a lot of criticism when this partnership was first announced. Not from me. I thought it was actually smart. Talk about it a little bit. Speaker 4 (7:02) It's really Speaker 1 (7:02) simple. They refer traffic. You know, it's just, you know, a portal. that people can go to, look up prices for 600 drugs. And if they- Like Speaker 6 (7:13) Obamacare, for example. Well, Speaker 1 (7:14) a little bit different, but- Speaker 6 (7:16) Oh, actually you can get it there. Yeah, I Speaker 1 (7:17) mean, you can, you go to trumprx.com and you put in the name of the medication and if they have it, it comes up. And if we're the cheapest, it refers you to us. We've seen our volumes increase, our sales increase. And the good news about that is Republicans want cheaper drugs and dependents want cheaper drugs, Democrats. So it's a win. We've seen our volumes go up and, you know, when our volumes go up, our costs typically go down. And because we're cost plus 15 percent, we've passed on those savings. So we've literally dropped the price since Trump RX launched. I think we've dropped the price for over 200 medications. So, you know, there's no downside. So Speaker 2 (7:57) talk about both of them, this policy from Biden and also. what Trump is doing, requiring Medicare to negotiate drug prices at the same time. Speaker 1 (8:05) So a couple of different things. So with the IRA where you're negotiating for 10 different medications, that's a bonus, right? Because along with that, it also put a cap on the amount of out-of-pocket that comes with Medicare to $2,100. And that, in turn, increased premiums. right? Because the insurance companies had to compensate for the cap that was made available to the patients, which is great for patients. I'm not complaining at all. So it kind of balanced those things out. But there were some drugs where it pushed down the price, and that's always a positive. There's no downside there at all. But I think the bigger issue was that we had biosimilars come out. And that pushed the price of like... Explain Speaker 2 (8:52) what that is. So Speaker 1 (8:52) biosimilar is like a generic for an injectable drug. Instead of it being a tablet, which would just be called a generic, it is an injectable drug. So like Stelara, Umira, right, things that are injectable, they had the equivalent of generic version, it's called a biosimilar, and that dropped the price for Stelara for... from $128,000 a year to on cost plus, it's $365 plus shipping every couple months, right? For Humira, it went from $8,000 a month to like $400 a month, $450 a month on cost plus. And so you saw some really, really expensive popular drugs drop in price significantly. And I think that drove it more than anything. What Speaker 2 (9:40) else has to be done to bring the prices down? So you want to be on the Trump arc site because you want volume, right? Presumably people use it. I think he's Speaker 1 (9:46) done a great job on IVF. Right. He said, meaning if you're trying to build a family and you need the fertility drugs, they were really expensive and he negotiated lower prices. Give him credit for that. You know, he put some pressure on the GLP-1 guys, and they came out, and particularly within Medicare, where in certain cases, you can get it for $50 a month. So he helped push in that direction. So, you know, love them or hate them. And I'm certainly not going to say anything that's going to change anybody's mind. And I'm not going to try. But at the same time, you know, give them credit where credit is due. Speaker 6 (10:25) So you got in a lot of trouble when you were arguing with Speaker 2 (10:27) people. You pulled a curse thing. I didn't think you should take that down, honestly, off when people were arguing you. Were you surprised by that? Because I think your goal is very clear. You want to lower prescription drug prices. Speaker 1 (10:39) Yeah, it's just the people, you know. That's just the way it is. You know, there's two types of TDS. There's Trump derangement syndrome and there's Trump devotion syndrome. Right. You know, and they're both equal, right? And whatever side of that you're on, that's the button, you know, your buttons that get pushed and the buttons you try to push. But, you know, I ignore it. Like I said, there's nothing I'm going to say that's going to change anybody's mind about Donald Trump. And I'm certainly not going to try. Speaker 6 (11:06) And when you're thinking about what has to be done next, you can't just put pressure on Speaker 2 (11:09) these people. because you have to have other things happen, right? How do you keep that up, the idea of it? Now, prices did go up during COVID because the supply chain, et cetera, et cetera. What has to happen next on a bigger scale? Speaker 1 (11:25) On medication or across the board? Speaker 2 (11:27) Across the board. Talk about it across the board. Speaker 1 (11:30) Well, I mean, just generally, there has to be improvements in processes, a reduction in prices, and all the inputs are changing, right? And I think the missing piece that's really driving a lot of inflation, you can argue whether it's high or low, is... you know, the deficit, you know, the debt that we're paying a trillion dollars a year on. And you're starting to see that. I don't know what interest rates were doing the last couple of days, but, you know, the 10 years up to like 4.6, 4.7, the 30 years. Over 5.3. People are Speaker 2 (12:02) much worried about this. Right. And so, Speaker 1 (12:03) you know, if you think of it big picture, you always look at the extreme and say, what would happen? Right. We saw what happens if there's zero interest rates, everything gets inflated. But let's just say, and this won't happen, hopefully, that, well, I'll put it in context. When I graduated from Indiana University, interest rates were 15%. Is there a potential for interest rates to go to 15 % again? I don't think so. But if they did, just for sake of example, the price of everything would go up. But more or just as importantly, the price of stocks would go down significantly. The price of assets would go down significantly. 61 % of people. own stocks directly or indirectly. That's going to change that wealth effect, which I think is holding some people up. Now, there's still that K-shaped economy where people who are struggling are truly struggling, and it's going to get worse. But if interest rates go up, it'll get dramatically worse for them. But at the top of the K, it'll get worse for everybody else as well. And that's my big concern because we don't know what that inflection point is. We don't know, is it 6 %? Is it 8 %? Who knows? But we know there is some level where the only people that would get rewarded are savers. Speaker 2 (13:17) Right, exactly, because they'll get more money. I remember that 15%. I remember. It was crazy. 6 % was... It Speaker 1 (13:25) seemed like... My first mortgage, 12%. Speaker 2 (13:27) 12%, mine too. Mine too. You're right. I mean, credit due, deficit, Trump, right? Like Trump has risen the deficit more. Everybody, yeah, everybody. Speaker 1 (13:37) Yeah. Trump, Biden, you name it. Speaker 2 (13:39) Trump, I think, wins. Well, in Speaker 1 (13:41) terms of aggregate, but it's a lot of big numbers, too. Yeah. Right? A 5 % growth on a bigger number is going to be bigger than a 5 % growth before. Absolutely. But Speaker 2 (13:49) when you think about what has to be done then, so what happens, you know, this has to do, healthcare, of course, is one of the biggest costs for people. Speaker 1 (13:55) Yeah. We have an economy, a healthcare economy, that is driven by just a few companies. You know, they are... The middlemen are driving up the cost of everything, you know, not just pharmacy, but also medical costs. You name it. There's nothing. They don't contribute much of any value, yet they increase the cost. They, you know, they make it more miserable for doctors to be doctors. What's Speaker 6 (14:21) the technical name for these guys? Well, there's a Speaker 1 (14:23) bunch of them, right? So, you know, so there's the big healthcare conglomerates, the Unitas, the Cigna's, the CVS's, et cetera. And they... have hundreds, if not thousands of subsidiaries, which include PBMs, which include third-party administrators, which include copay maximizer, all these consultants. There's just so many ways that they get into your pocket and you don't even know it's them. You know, they own clinics, they own, you know, doctors, they hire, you know. 10 % either directly or under contract, number of doctors at the biggest healthcare conglomerate. And so, you know, that creates so much friction and so much cost in the system that... We don't even control the cost of our healthcare system anymore. Speaker 6 (15:14) No, it's interesting because I think about my own, I have a bunch of prescription drugs and I don't even understand them. And I'm a smart person. Like I don't understand where the, it's not easy for anybody. Speaker 3 (15:24) No, that's why we started Cost Plus, right? Oh, I use Cost Plus. Speaker 1 (15:27) And I thank you for that. No problem. Costplusdrugs.com. Nobody understands, nobody knows what something costs. Nobody understands why it costs. Nobody understands why there's a different price for everybody. Nobody understands why there's no transparency other than cost plus drugs, literally. And so Speaker 4 (15:44) if you don't understand these things, it's designed to be confusing. The more Speaker 1 (15:50) information asymmetry, the better leverage they have to raise prices and create friction. And that's exactly what they do. And there's a lot of indirect, not obvious scenarios that are created. So, so much work is done to be able to... provide the information that they require for each claim, for each medical instance or pharmacy, that you're driving doctors crazy. Not only are you reducing the amount of time they're able to spend with patients, but you're creating burnout to the nth degree. And it wouldn't shock me if we're starting to see the number of applicants for med school start to Speaker 4 (16:27) decline. It's Speaker 2 (16:28) my brother's number one complaint. He's a doctor. Number one complaint. Yeah, Speaker 1 (16:32) it's all the shit they make you do. other than caring for the patient. And it's not necessary. You could extract all that if you just got rid of PBMs, and literally not even get rid of them. If you just say, made a law that said PBMs are no longer able to control formularies. Formularies are that thing you have to look at with your insurance coverage to see if your drug is covered or not. That gives the PBMs all the leverage to go to all these big brand and specialty drug manufacturers and say, look, if you don't do exactly what we want in paying rebates, doing business or not doing business with cost plus drugs, then we're going to diminish your positioning on the formulary so that you're no longer available to the 80 million people we cover. And not just for one drug, but for your entire... portfolio or will... Panoply. Yeah. Speaker 4 (17:21) So that's costing you hundreds of millions or billions. So they have that much control and they do so little, you know, they don't really add much value. What Speaker 6 (17:29) do they try to do to your company? What is the biggest challenge you guys face? Speaker 1 (17:33) Well, they just, they tell these brands, like we have almost every generic other than controlled substances. We don't want to deal with that. But Speaker 6 (17:39) not Speaker 1 (17:39) everything's Speaker 6 (17:39) generic in some critical drugs. No, not everything is. And so Speaker 1 (17:41) then there's brands and branded specialty drugs. And Speaker 4 (17:45) we'll go to the brands and say, look, we have millions of customers, right? We're helping millions and millions of people. Why won't you sell your brands through us? And the answer is always identical. Speaker 1 (17:55) Because the PBMs have told us if we deal with costplusdrugs.com, they will diminish us on their formularies. And as I said, it could cost tens Speaker 4 (18:05) of millions. hundreds of millions, billions of dollars across their entire drug portfolio. Speaker 1 (18:10) And they're like, Mark, we love you, but we can't cut off our nose to spite our face. And the reason that they're afraid, that the PBMs are afraid, is because of what we've done to the pricing of biosimilars and specialty generics, right? When we started publishing the price with our cost, everybody all of a sudden had a reference point with which to negotiate from. Even the FTC, Lena Kahn, when she was suing these guys, was using our price list and our markups to define how much people were getting ripped off and to lead towards your settlement. And now, if all of a sudden you could see what the actual cost is of your Xarelto or whatever it may be and see what the price would be with only a 15 % markup, That destabilizes the pricing and revenue for all the PBMs and the insurance companies that own Speaker 6 (19:02) them. But you Speaker 1 (19:02) can't Speaker 6 (19:02) publish the prices of the ones you can't get, can you? Speaker 1 (19:06) Correct, right. Well, yeah, because we don't know what our cost is. We can't sell them. And they don't want us to be able to sell them specifically. Could Speaker 6 (19:12) you Speaker 1 (19:12) not get Speaker 6 (19:13) those lists, Mark, and start publishing them? No, Speaker 1 (19:15) no. Literally, it's like Fight Club. Number one rule of Fight Club is you can't talk about Fight Club. Number one rule of PBM. contracts and pricing, you can't talk about it. And I'll give you the perfect example. Speaker 6 (19:25) You're a clever man. I bet you could get your hands on them. Speaker 1 (19:28) It's not that I can't, but it doesn't really help me in terms of pricing, right, or selling. But let me give you the perfect example. There is something called TRICARE, which provides pharmacy to the military. People that are enlisted now, people that are retired, wherever they may live, right? And Elizabeth Warren. went to them and they said, okay, TRICARE, you have hired this company, this big PBM called Express Scripts, right? Speaker 3 (19:54) And- I know them well. Right, so Express Scripts. Speaker 1 (19:57) And so I want to know what you're charging the government every time somebody in the military or formerly in the military uses a drug that you carry. Express Scripts said no. The military said,