Announcing Mark Cuban’s Cost Plus Healthcare Company
I wish this were a real announcement. Here’s my prescription for a lower cost health plan brought to you by Mark Cuban.
In recent times, employer groups have initiated lawsuits to uncover the costs they are being charged for healthcare services, highlighting their frustration towards health insurers who are perceived to be permitting outrageous charges from healthcare providers. Employers are witnessing Rx costs rise by as much as 20% from GLP-1 therapies for obesity and diabetes. However a recent survey by the American Enterprise Institute (AEI) revealed shocking margins taken by Pharmacy Benefit Managers (PBMs) and other intermediaries, leading to 2X-3X increases in prices for Wegovy, Ozempic, and Mounjaro.
Meanwhile health systems are also hurting, operating on negative margins amidst an environment of rising labor costs, reduced reimbursement rates for government patients and commercial reimbursement rates that are not keeping up with costs. They have incumbent advantages including scale provider groups, trusted local brands, and 340b pharmacy pricing. Their non-profit status, with the associated bureaucracy and associated risk averse culture, makes it hard for local health systems to leverage these assets to improve patient care and bring down prices.
In such a dire scenario, the only entities reaping benefits are the payors, particularly those owning PBMs and specialty pharmacy businesses. That is why I’m excited to announce Mark Cuban’s Cost Plus Healthcare, launching first in St. Louis in collaboration with SSM Health.
"Our healthcare system has become a goldmine for PBMs and other intermediaries. Mark Cuban's Cost Plus Healthcare delivers healthcare at costs that actually make sense. I’m excited to launch both employer sponsored and medicare advantage plans in 2025 in the St. Louis market in partnership with SSM Health. This collaboration is more than a venture; it's healthcare that serves the patients and the providers, not the profiteers." — Mark Cuban
St. Louis presents a fertile ground for this revolutionary healthcare model for a myriad of reasons. SSM Health, a well-established health system, already operates a narrow network plan for its employees and owns a PBM, Navitus, in which Costco holds a minority stake. Navitus operates on a transparent flat per-member fee model, passing through any rebates to employers. St Louis’ local employer base is quite robust includes 8 Fortune 500s like beer giant AB InBev as well as a number of academic and local government employers. This existing infrastructure in St. Louis serves as a robust foundation for Mark Cuban’s Cost Plus Healthcare to flourish and set a precedent for other regions.
The operational blueprint of Mark Cuban’s Cost Plus Healthcare is simple. By partnering with SSM and Costco, the initiative will create $0 Copay pharmacies leveraging the 340b pharmacy program for discounted branded drugs, while Mark Cuban’s Cost Plus Drug Company will supply generics either directly to these pharmacies or via mail order. According to HHS, health systems like SSM receive discounts of 25-50% on average through 340b, with some expensive brand names drugs costing under $1. Mark Cuban’s Cost Plus Healthcare Company’s pricing model is designed to add a mere 15% markup on the 340b price along with a nominal dispensing fee, and an additional fee for cold chain drugs or others with extra costs. This model brings a significant cost reduction to the table—for instance, a drug like Humira, priced at $5,500 on the list, would cost merely $13.15 under this model. Even Mark Cuban’s Cost Plus Drug Company’s market leading Humira biosimilar is $636. Members who utilize non-340b pharmacies will have restricted pharmacy networks and copays for their medications through Navitus’ existing pharmacy network.
Mark Cuban’s Cost Plus Healthcare Company provides a PMPM for primary and specialty care to employers based on number of covered lives. SSMs network will be supplemented by a select network of independent practices providing in person, virtual, and hybrid care. Patients will get coverage for therapeutic services that are oddly not covered by most payors such as massage therapy, acupuncture, and TMJ treatments. Procedures are priced based on volume that is transparently listed for employers in their service contract. Each patient under this model would be endowed with a Cost Plus Visa Card, ensuring immediate payment to providers, pharmacies, and medical device distributors, while also serving as a conduit for delivering supplementary benefits like healthy food, exercise equipment, and other wellness-oriented resources.
Mark Cuban’s Cost Plus Healthcare is not just a conceptual model, it’s the next step in cutting out the middle man in healthcare. Stay tuned for announcements and pricing coming soon.
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