Dallas City Wire

Billionaire entrepreneur and Dallas resident Mark Cuban said earlier this week that reform of the pharmacy benefit management (PBM) industry could save taxpayers billions of dollars.

His statements came in response to a new Federal Trade Commission (FTC) report that said three PBMs have “hiked costs” for a range of prescription medications.

"Glad to see the FTC use Cost Plus Drugs markups to show just how badly the big PBMs are ripping off People," Cuban posted on X. "Can’t say it enough. If your company uses a big PBM, fire your broker or consultant."  

"This is prime territory for DOGE to save taxpayers money," said Cuban. "The report says it clearly, Elon Musk, Vivek Ramaswamy and DOGE. We are ready to save taxpayers billions!"

Cost Plus Drugs is a pharmacy platform founded by Cuban in 2021. The company operates by negotiating directly with manufacturers and bypassing traditional pharmacy benefit managers. It offers a selection of generic medications priced at cost, plus a flat 15% markup and a pharmacy fee. 

The platform focuses on transparency by disclosing drug prices and cost breakdowns to consumers. Cost Plus Drugs ships medications directly to customers in the United States through its online platform. The company continues to expand its list of available medications and partnerships with manufacturers.

The Cost Plus Drugs markup was cited in the FTC report, which FTC Chair Lina Kahn said "finds that three major pharmacy benefit managers hiked costs for a wide range of lifesaving drugs, including medications to treat heart disease and cancer."

The report is the second interim release in a study launched by the FTC in June 2022. It focuses on the role of PBMs in shaping drug pricing and access to prescription medications. 

A PBM is a third-party administrator of prescription drug programs for health insurers, self-insured employers, and government agencies. PBMs negotiate with drug manufacturers to secure discounts and rebates on medications, manage pharmacy networks, and process prescription drug claims. PBMs also provide services such as medication therapy management and mail-order pharmacy services.

“The ‘Big 3 PBMs’—Caremark Rx, LLC (CVS), Express Scripts, Inc. (ESI), and OptumRx, Inc. (OptumRx)—marked up numerous specialty generic drugs dispensed at their affiliated pharmacies by thousands of percent, and many others by hundreds of percent,” said the FTC’s press release. “Such significant markups allowed the Big 3 PBMs and their affiliated specialty pharmacies to generate more than $7.3 billion in revenue from dispensing drugs in excess of the drugs’ estimated acquisition costs from 2017-2022.”

One practice identified in the report is spread pricing, where PBMs charge health plans a higher price for a drug than they reimburse to pharmacies, keeping the difference as profit. This practice can result in increased costs for payers and patients, said the FTC report, while limiting the revenue for pharmacies. 

The report also said rebate agreements between PBMs and drug manufacturers incentivize higher list prices for medications. 

PBM fees and reimbursement rates, said the report, also threaten the financial stability of small pharmacies, reducing patient access to local providers of essential medications. Patients in these areas often face higher out-of-pocket costs and fewer options for obtaining the medications they need.

The agency said it will use the report findings to develop policy recommendations and enforcement measures.. Public comments on the report are encouraged and will inform the FTC’s ongoing efforts to evaluate the broader impact of PBM practices on drug prices and access.

DOGE, cited by Cuban, is the acronym for the Department of Government Efficiency (DOGE), is an advisory body announced by President-elect Donald Trump on November 12, 2024. DOGE's mission is to streamline federal operations and reduce government expenditures. 

Co-led by Tesla founder Elon Musk and entrepreneur and former Republican presidential candidate Vivek Ramaswamy, DOGE aims to cut up to $2 trillion from the federal budget by eliminating wasteful spending, reducing the federal workforce, and consolidating agencies. Operating outside the formal government structure, DOGE will collaborate with the White House and the Office of Management and Budget to implement its recommendations.