The Mark Cuban Cost Plus Drug Company is teaming up with EmsanaRx, a pharmacy benefit manager (PBM) focused on employer plans, to make lower-cost prescription drugs more accessible to patients through their employers.
The program, EmsanaRx Plus, is described as "a standalone pipeline" for employers to supply drugs to employees through Cost Plus Drugs, an online pharmacy that offers hundreds of the most in-demand generic medications at significantly marked-down prices.
"Like Cost Plus Drugs, EmsanaRx is working to disrupt the current pharmacy supply chain to eliminate the unnecessary markup and profiteering that is burdening businesses and consumers with high drug costs," Cuban stated in a press release. "By partnering with a company as committed to transparency as Cost Plus Drugs, and with the technological capabilities to customize to the needs of self-funded employers, we are able to bring lower-cost medicines to a wider swath of the American public."
Mason Westt works behind the counter, amid the coronavirus pandemic, at the Watson Pharmacy in Fordyce, Arkansas, August 12, 2021. REUTERS/Shannon Stapleton ·Shannon Stapleton / reuters
Cost Plus Drugs is a direct-to-consumer prescription drug company that aims to eliminate middlemen by buying drugs directly from manufacturers and then selling them "at our cost + a fixed 15% margin." The partnership with EmsanaRx would enable Cost Plus Drugs, which currently does not accept insurance, to serve the 156 million Americans covered by employer-provided health care.
“It helps us save the health care system overall money by offering a way to save employers millions of dollars on their health care spend,” Dr. Alex Oshmyansky, founder and CEO of Cost Plus Drugs, told Yahoo Finance. “It helps get us closer to eliminating the practice of wildly inflated fake ‘list’ prices of pharmaceuticals which patients are often asked to pay, particularly if they are on a high deductible plan.”
How EmsanaRx differs from most PBMs
The Mark Cuban Cost Plus Drug Company is consistently critical of the role that PBMs play in the U.S. health care system, singling out PBMs because of their role in determining America's exorbitant drug prices.
The National Association of Insurance Commissioners defines PBMs as "third-party companies that act as intermediaries between insurance providers and pharmaceutical manufacturers" by creating "formularies, negotiate rebates (discounts paid by a drug manufacturer to a PBM) with manufacturers, process claims, create pharmacy networks, review drug utilization, and occasionally manage mail-order specialty pharmacies."
Oshmyansky explained to Yahoo Finance that PBMs "serve an intermediary, payment processing function, but many take far too much for the services they render. This amount, if often, obfuscates with complicated financial engineering.”
The role of pharmacy benefit managers (PBMs) in the U.S. health care system. (Chart: Commonwealth Fund)
EmsanaRx CEO Greg Baker stressed that his company differs from other PBMs because its financial goals are aligned with its customers rather than shareholders.
“We are fully transparent and unlike other PBMs, all employer data is available to customers so they can confirm how we are performing and how much money they’re saving,” Baker told Yahoo Finance.
Unlike the three biggest PBMs — CVS Caremark, Express Scripts, and OptumRx — EmsanaRX does “not own all business channels in the ecosystem or create offshore entities that lead to huge profits while providing no additional value," Baker added. "We are operating a totally transparent business — no hidden fees or business practices.”
Costs are also incurred when medications simply aren't covered: A May 2022 report from Xcenda, a health care consulting firm, found that 1,156 medications were excluded from health care coverage by at least one of the three biggest PBMs. This was a nearly 1,000% increase since 2014. Among those exclusions, brand medicines "without a generic or biosimilar alternative accounted for nearly half (47%) of total formulary exclusions, leaving patients with fewer treatment options."
'Failures within the generic drug market'
While the Mark Cuban Cost Plus Drug Company is leveraging generic drugs to disrupt Big Pharma by lowering costs, challenges have emerged in the generic drug market itself.
“Although widely used brand-name drugs often attract competition from multiple generic manufacturers, some decades-old drugs have limited competition,” a July 2022 journal article in the Annals of Internal Medicine stated. “One in 5 generic drugs doubled in price between 2014 and 2017, concentrated among drugs with limited competition. Federal and state investigators have charged several generic drug makers in limited markets with anti-competitive behavior, including price fixing; in the federal investigation, five drug makers have admitted fault.”
Supply chain disruptions also pose a major challenge for the generic drug market, as most are manufactured outside the U.S. And according to the report, manufacturers generally retain 35% of revenue while the rest is “split among wholesalers, pharmacies, pharmacy benefit managers, and insurers.”
The report added that the emergence of the Mark Cuban Cost Plus Drugs Company actually highlights "failures within the generic drug market that merit the attention of federal policymakers to ensure that all patients have access to low-cost generic drugs.”
By partnering with EmsanaRx, Mark Cuban Cost Plus Drugs Company is looking to at least expand the benefits of lower-cost generic drugs to some employer-provided plans.
"Until today, most employers have not been able to offer these affordable medications to their employees," Baker said. "We are allowing exclusive access to the lowest cost medications that Cost Plus provides. ... For the first time, an employer can provide a product to employees and their families that gives them direct access to lower cost drugs and removes the traditional middleman that inherently adds cost. Just as importantly, EmsanaRx Plus provides the employer access to data they typically do not have today when employees seek out lower-cost drugs through other avenues in the marketplace."
CLARIFICATION: A previous version of this article incorrectly stated that Mark Cuban Cost Plus Drugs Company offers more than 1,000 generic medications. The company sells approximately 350 unique drugs with different dosages and strengths that total roughly 1,000.
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Adriana Belmonte is a reporter and editor covering politics and health care policy for Yahoo Finance. You can follow her on Twitter @adrianambells and reach her at [email protected].
