Cost Plus Drugs

A new online pharmacy funded by Mark Cuban promises to sell prescription drugs at a fixed markup, 15% over cost plus a $3 flat fee. What’s the catch?

As far as I can tell, there are two- they only sell generics, and they don’t take insurance. But I think this will still save many people a lot of money.

The most expensive drugs get that way because they are sold by monopolies, almost always because they were invented less than 20 years ago and are still on-patent. But it’s still possible for older drugs to be sold at huge markups, as Martin Shkreli could tell you now that he’s out of prison (Shkreli’s case is supposedly what inspired Dr. Alex Oshmyansky to start this pharmacy). Sometimes you can still blame these markups on monopolies, just induced by the FDA instead of patents. But even for generic drugs with competitive manufacturing, you still sometimes see large and variable markups at the pharmacy level. So I think there’s still huge value in a pharmacy offering a low and stable markup on generics.

What about not taking insurance? First of all, lower cash prices obviously still benefit the 28 million Americans who don’t have health insurance. But even for those with insurance, it’s surprisingly common throughout health care to find cash prices lower than their copay. I have relatively good insurance but when I checked Cost Plus Drugs for the last two prescriptions my family got, I found that one was 80% cheaper than our copay (the other was about the same as our copay, so we’d only come out even, though we’d presumably save our insurer a lot).

Cost Plus Drugs originally wanted to also work through insurance as a Pharmacy Benefit Manager, but seems to have pivoted to being an “unPBM” that just offers generics to employers to supplement their existing plans. They also want to manufacture some of their own drugs, which seems on track to happen. They were started as a Public Benefit Corporation, so while they are for-profit this lends credibility to the idea that they really do want to keep prices down, not just start with low prices to make a name for themselves. Anyway, this seems like a worthy experiment and I encourage anyone with an expensive prescription to see if you can get it cheaper here.

Sick of high drug prices? Try some low-price anti-nausea mediation