Prescription Drug Prices in America

Billionaire Mark Cuban this past week launched an online pharmacy for generic drugs, promising steep discounts over traditional methods.

For nearly 30 years, presidents have tried and failed to curb the price of medicines despite strong public support for the idea. Could Cuban’s venture succeed where others have failed?

💊 The deets: The Mark Cuban Cost Plus Drug Company’s strategy is to "bypass middlemen and outrageous markups" and negotiate directly with drug makers and pharmacies, according to a press release.

• In doing so, the company says its prices will reflect the actual manufacturing cost plus a flat 15% margin and pharmacist fee.
• Its website currently offers over 100 generic drugs to treat a wide range of illnesses, including diabetes, asthma, and heart conditions.
• Important to note: The MCCPDC doesn’t take insurance, so any drugs you buy through them won’t count towards your deductible.

🔢 By the numbers… The most recent stats show US prescription drug prices are more than 250% higher than the 32 other nations in the ​​Organisation for Economic Co-operation and Development on average.

• Many blame this discrepancy on the role of pharmacy benefit managers, aka US companies that use their wholesale power to negotiate rebates with drug manufacturers. They then pass those savings onto health insurers after keeping a portion for themselves.
• Per The Commonwealth Fund, a private foundation dedicated to healthcare research and policy, there’s not much transparency into how much of the savings actually end up in your wallet.
• What’s more, current rebate incentives lead many benefit managers to favor expensive drugs rather than cheaper, more generic ones, passing the high costs on to consumers.

🏛️ On Capitol Hill: In November 2020, former President Trump implemented a plan that would peg the cost of US prescription drugs to the lowest price paid by certain OECD-member countries.

• It was set to take effect on January 1, 2021, but was blocked by several district courts and later rescinded by the Biden administration, which made reducing the cost of prescription drugs a key component of its stalled Build Back Better agenda.