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Mark Cuban Cost Plus Drug partners with employer group

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Alex Kacik

The Mark Cuban Cost Plus Drug Co. and the Purchaser Business Group on Health are partnering to provide discounted prescription drugs to self-insured employers.

The coalition of nearly 40 large non-hospital employers and Cost Plus Drugs, which contracts directly with pharmaceutical manufactures to offer drugs at fixed-rate markups, on Thursday launched EmansaRx Plus, a subsidiary of the business group’s pharmacy benefit manager that supplements employers’ existing drug benefits. The subsidiary looks to boost continuity of care by offering lower-priced medications through employers’ self-insured plans rather than going through a third party with drug discount cards.

It marks the first foray outside of the direct-to-consumer market for Cuban’s company, which has expanded to carry nearly 1,000 drugs since it formed in January. The venture allows the business group to expand its internal network of services, tailoring it for employers.

Cost Plus Drugs’ focus on the direct-to-consumer market has limited its growth potential, said David Dobrzykowski, an associate professor of supply chain management at the University of Arkansas and director of the university’s Walton College Healthcare Initiatives. 

“This could mean hockey-stick type growth for Cost Plus Drug Co., which has the potential to further decrease drug costs for their customers,” he said in an email. “The move may also force the hand of PBMs to increase the transparency of their pricing and contract terms with manufacturers and self-funded employer health plans, both of which would bring enormous benefit to consumers.”

About half of insured Americans have employer-sponsored health plans, according to Kaiser Family Foundation data. Employers are increasingly seeking to partner with startup companies that claim they will curb healthcare cost inflation and boost transparency.

“EmsanaRx Plus, in combination with [Cost Plus Drugs], will adhere to a new model of providing the deepest discounts possible and taking only nominal administration fees so the members and employers can come to rely on a consistent reduction in overall prescription costs,” Greg Baker, CEO of EmsanaRx, said in an email. “Both organizations are focused on operating a totally transparent business model with no hidden fees or business practices.”

Traditional PBMs and pharmaceutical manufacturers profit significantly by padding drug costs before any discounts or rebates are applied, he added.

Health plans typically administer pharmacy benefit services internally or contract pharmacy benefit managers, which negotiate rebates and discounts with drug manufacturers and pocket an undisclosed share. More employers and payers are contracting directly with PBMs, or in the case of the Purchaser Business Group on Health, create their own.

EmansaRx, which launched in October 2021, stemmed from employers’ frustration at being denied access to information about drug costs, rebates and administrative fees.  While drug price inflation has slowed over the past five years, pharmaceutical prices are expected to increase 3.26% in 2023, according to Vizient, a group purchasing organization.

Independent consultants have found that Cost Plus Drugs’ pricing models saves up to 60% on generic drug spending, Dr. Alex Oshmyansky, founder and CEO of Cost Plus Drugs, said in an email. 

“We could save employers millions of dollars on their pharmaceutical spend with very little effort,” he said. “This helps save the system overall money, and our transparent pricing helps save patients with high deductible plans money on their medications.”‘

EmansaRx Plus will start with generic drugs and offer some branded drugs early next year, Oshmyansky said. The partnership does not include a financial exchange. 

Independent pharmacies like Cost Plus Drugs, Freedom Pharmacy, Blueberry Pharmacy and ScriptCo Pharmacy forgo covering high-cost branded drugs, allowing them to more aggressively negotiate for widely used generics. More employers, patients, startup PBMs and even traditional insurers like Harrisburg, Pennsylvania-based Capital Blue Cross are looking to partner with Cost Plus Drugs instead of working with a legacy pharmacy benefit manager, said Antonio Ciaccia, president of the consultancy 3 Axis Advisors, who has done data analytics work for Cuban’s company.

“It is creating pressures on legacy PBMs to explain why their prices have been so bad relative to what a startup is offering,” he said, adding that traditionally a PBM’s business model centers around using its size to negotiate better prices. “Cuban and his company are pulling the rug out from under them.”



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