[ALittleLight]

Either I don't understand the phrase "Vertical integration" or Mark Cuban doesn't. Cuban says "We basically created a vertically integrated manufacturing company." But, they don't do manufacturing, because later Cuban says "The manufacturers love what we're doing for that reason". They also apparently don't do the pharmacy aspect because Cuban says his company "charges a $3 pharmacy fee to pay the pharmacists it works with".

It sounds to me like this is less of a vertically integrated drug manufacturer and more of a website to resell generics at a 15% markup plus pharmacy fee plus shipping and handling.

Looking at his website I see a "powered by truepill" logo at the bottom. Truepill seems to be a company that does online pharmacies... So, Cuban Cost Plus is, possibly, a digital storefront for truepill?

[throwaway78987]

Ok; personally knew Alex. I think there is a lack of understanding here. Yes maybe you can get some drugs cheaper at Walmart, but certainly not all “generic” drugs. Once a drug is outside patent protection, others can manufacture it but you have to show equivalence, which can require samples from the original or existing manufacturers, who can and have tightly controlled distribution to make it very challenging to get approval. Couple that with the risk of an existing manufacturer just dropping the price to eliminate any potential profit and you can see how some drugs can get into the place where there is only one source that can raise their prices as they see fit. I believe the idea here is they will eventually manufacture or source those drugs that are patent unencumbered but sole source. Yes, the system is terribly imperfect (both a physician and a chemical engineer here). Yes, it doesn’t sound like this is a charity. But expecting that the walls of regulatory capture to just fall down because it would better for all of us is just wishful thinking. Let’s save our criticism for those raising the prices of epi-pens and what not year over year. I think the criticism here is misplaced - the company was incorporated with a public mission in mind, and they seem to be moving into manufacturing; it wouldn’t make much sense to make something that can already be sold at Walmart for $4. Let’s see how it goes and wish them the best.

[ALittleLight]

This article is simply saying things that are wrong. That merits criticism regardless of what other people may or may not be doing. Their company isn't vertically integrated. They are reselling generics drugs online and may build a small factory in the future.

[pierrefermat1]

This response makes no sense whatsoever, the parent comment was making a criticism for falsely using the phrase vertical integrated which you do not address at all

[s1artibartfast]

They plan to both manufacture and resell.

>15% markup plus pharmacy fee plus shipping and handling.

This is the intent, and still cuts out at least 2 middle men between consumers and manufacturers: the insurance company and pharmacy benefit managers.

[adam_arthur]

Should cut out the doctors for most of these too...

Or at least allow people to continue to renew their medications after prescribed one time, rather than requiring further doctor's visits.

Most things in medicine are expensive due to legal monopolies/improper regulations. e.g. no reason you shouldn't be able to buy prescription glasses for $10-20 dollars off the shelf. The main problem with medical costs is that it's not a free enough market, with sufficient competition.

[bobthepanda]

Some medications are not renewed like this for good reason.

Some medications require regular monitoring to ensure that bad side effects aren't happening; PrEP requires checkups every 90 days to make sure kidney function is not getting impacted.

[adam_arthur]

That's fine but many don't require it for good reason, thus should be exempted.

People can easily seek out prescriptions as it is today, they just need to find a doctor and say the right things. This is common with TRT, Modafinil, Cannabis etc the barrier as it exists today is mostly artificial.

We allow people to drink alcohol, so any drug less dangerous than that shouldn't be gated

[Terry_Roll]

Its cost, losing kidney function and the subsequent dialysis is more expensive than a 90day check up. Besides you dont want to lose kidney function if all it took to avoid it was a 90day check.

Saying that kidney function usually involves Estimated Glomular Filtration Rate which means they measure the creatinine. Now if you happen to supplement with creatine, creatinine being the metabolised form will alter the eGFR! So if a dr doesnt ask you if you are supplementing with vitamins, minerals and other supplements, you could skew some medical tests and end up with a medical condition that doesnt exist!

You can also get quite alot off your pharmacy, but you need to know what to say, so some online pharmacys are better to use to work out what to say.

For example, if you want to get hold of Testogel here in the UK, for males its a nice pick me up and its being used in South Africa for dementia treatment, you need to say your T levels are below a certain amount. If you get rejected, you lower the amount on another website and then you can eventually work out what the level is that lets you have a testogel prescription!

Its not too hard to game the medical system for low risk drugs, for everything else you have various people who already qualify and through word of mouth have been known to sell on their meds because the Dr might sometimes up the dose if there is no response or told there is no response. SSRI's are like this. In theory a blood test measuring the 5-Hydroxyindoleacetic acid from the jugular vein will test if someone is taking SSRI's but they also do other things which go undocumented until some published scientific study highlights it.

To be honest though, the best drugs are vitamins and supplements, the number of medical studies I've read highlighting negative effects is quite shocking. Take https://en.wikipedia.org/wiki/Bisphosphonate#History It was first used for bone problems in the 1960's but the technology wasnt around to explain exactly what it was doing until the 1990's! Loads of studies slate the use of Bisphonates but these are recent like post millennium studies.

In fact you go through Google Scholar, you can see a trend from the first studies published in the 1800's where medicine was largely using what was found in the body, so B12 deficiency was eating raw liver, then from WW1 to WW2 patented drugs started to appear and thats when modern medicine started, but it is a case of medicine is restricted by the technology so AI in medicine is big business.

This gives you an idea of how the medical profession work, drug companies develop something run a battery of tests and then see if they can get it licenced and sold as a treatment.

https://en.wikipedia.org/wiki/Bupropion#History This is another drug designed for one thing but they noticed it had smoking cessation properties so it got relicensed.

Painkillers even the common ones like ibuprofen and paracetamol are also dangerous drugs. Paracetamol will destroy your bones and your kidneys dont like ibuprofen.

This is the history of Ecstasy aka molly aka mdma TLDR,

1912 German pharma Merck developed the compound for blood clotting, didnt work so got shelved.

1950's US Army dust off the compound and get university of Michigan to study it.

1973 results declassified.

1978 https://twitter.com/DrAShulgin a former Dow chemicals chemist into his psychoactive drugs looks at it and publishes a report "the drug appears to evoke an easily controlled altered state of consciousness with emotional and sensual overtones. It can be compared in its effects to marijuana, to psilocybin devoid of the hallucinatory component, or to low levels of MDA"

Psychotherapists start using it.

1980's its getting popular and DEA start to take notice.

1985 DEA get it banned, people having too much fun! https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3931692/

Medicine is like chemical hacking of the body.

[Auracle]

I’m prescribed 3 controlled substance medications. I need to go online and send a message to my doctor every time I need them refilled, and I go through them all at different rates. I can’t get them especially early and if the doctor isn’t in I might need to wait, though I think he sometimes does it remotely. It’s insane.

My clinic’s backend used to have a slightly easier ‘refill prescription’ form but they changed it to only work with their integrated pharmacies. The closest one is an hour away.

[weird-eye-issue]

Most medications don't require this. Blacklist the ones that do

[adrr]

What drugs are those? Looking at the list of most common drugs prescribed, I can't see any that shouldn't require a doctor. Maybe finasteride, viagra and retin a but those are available with a usually are available with usually free telemedicine visit at one the many telemedicine startups.

https://www.goodrx.com/drug-guide

[weird-eye-issue]

I've taken several over the years where nothing was needed except telling the doctor or psychiatrist that "yep things are still the same". Adderall, Ritalin, Lexapro, Trazadone, Xanax, Gabapentin, and more all fit in this category for me personally

[danachow]

I’m not saying freer markets in some aspects of medicine would be better - but the libertarian dream in medicine is probably very naive and fails to learn from history to boot (medicine, especially pharm was much freer 120 years ago - it didn’t work out too well).

And of the big problems in medicine - a prescription for glasses (which isn’t really a medical service in the US - optometry is not a medical profession) just doesn’t register for me - you can order glasses online without a prescription if you are so inclined.

Meanwhile there isn’t any realistic libertarian solution to allocation or access to complex medical care - and just hand waving “free markets” doesn’t make it so.

[adam_arthur]

You can't order corrective lenses online without a prescription. You can order frames, or reading glasses. You need a prescription for both contacts or the lenses themselves.

Contacts would certainly be much cheaper without that hurdle.

And I bring up vision, because it's a common problem and for less well off folk with families it can be a big expense, basically entirely unnecessarily so. Imagine making 20k/year and you have to pay $500-$1000 a year for vision correction for your family. That's 2.5-5% of your pretax compensation

There's no handwaving here. Competitive markets require complete information. Information about costs to the consumer is basically entirely opaque. Over 90% of medical costs are non emergency, so if people could comparison shop, costs would go down. Also requires skin in the game (e.g. marginal cost per visit).

Look at plastic surgery for a good example of how free market/non insurance based medicine can fare. Many procedures are quite cheap, and while many are still expensive, much cheaper than necessary medical care covered by insurance. Also the number of doctors is still limited by the AMA, so even this is not fully competitive. There's an arbitrary cap on number of providers

[danachow]

> Also the number of doctors is still limited by the AMA, so even this is not fully competitive. There's an arbitrary cap on number of providers

This is an old trope but hasn’t even been superficially true for years. The AMA does not have the authority to limit the number of doctors. In any event their political influence has become less and less relevant for decades now, so even their ability to influence the number of docs is quite limited - I am not even am AMA member - I was only during medical school to get discounts on test prep. I don’t believe most of my peers are AMA members either - they belong to their specialist groups. Meanwhile the number of medical schools and students in the US has increased substantially in part due to AMA and AAMC. Meanwhile internal medicine residencies still have to fill their ranks with imported talent (foreign medical graduates) - only the lucrative subspecialties are the ones that remain limited and competitive. There are also forces at work to limit the number of MD jobs available that have nothing to do with the supply of MDs (replacement of positions with midlevels). The limit on residency positions is a partisan federal funding issue going on for years and only recently has much headway been made.

On eye care, I can of course self prescribe but even so for contact lenses I usually end up purchasing overseas from reputable retailers because of the price fixing of contact lenses - and I’ve never been asked for a prescription. It’s not that hard to get eyewear without a prescription.

[weird-eye-issue]

No you don't need a prescription for corrective lenses. I've ordered them without and just had to confirm there would be no returns and such

[adam_arthur]

I'm pretty confident it's not possible, as I was specifically looking for this recently.

But please link me to a US site where I can legally buy contacts without providing proof of prescription, if there is one!

[beaconstudios]

isn't forcing hospitals to post prices a form of regulation? In a free market (I'm interpreting this to mean laissez-faire - a market setup maximise competition and consumer choice must be regulated) nobody will post prices unless they have to or the procedures are elective, like plastic surgery is.

[adam_arthur]

Yes, I'm not advocating a free market, but a competitive market.

Fully free markets can lead to negative externalities like monopolies, pollution etc.

What leads to good societal outcomes is competitive markets. It just happens that free and competitive overlap a lot of the time. Information hiding makes a market less competitive, but is permitted under a full free market mentality. This is an area where regulations are warranted and useful.

Competitive capitalism should be the goal for most areas in modern society. Which in almost all cases only requires light regulation.

[robbedpeter]

Where's the "didn't work out too well" come from? Prohibition never works, whether it's restricting coffee or cocaine.

Combine education and free access to everything with reasonable daily unit limits and per-substance licensing. You want meth, you go through meth safety training and get a yearlong endorsement allowing you to buy up to the daily limit at a pharmacy, no prescription involved.

Set up due process that limits or eliminates legal access to substances based on criminal or medical situations.

Drug abuse - using in inappropriate situations leading to misbehavior - can be treated as a medical issue. Misbehavior that rises to the level of criminality is already handled.

It's absurd to think that any adult in a free country has any business whatsoever telling other adults what they can ingest or do in private.

Some variation on these notions are already demonstrated across the world. The current schedule system and drug laws in America serve only the bad guys, whether it's commercial prison slave labor, drug cartels, big Pharma, or the alphabet jackboots.

[claudiulodro]

> Where's the "didn't work out too well" come from?

I believe they were referring to the snake oil craze of the 19th century, not prohibition:

> The term comes from the "snake oil" that used to be sold as a cure-all elixir for many kinds of physiological problems. Many 19th-century United States and 18th-century European entrepreneurs advertised and sold mineral oil (often mixed with various active and inactive household herbs, spices, drugs, and compounds, but containing no snake-derived substances whatsoever) as "snake oil liniment", making claims about its efficacy as a panacea. Patent medicines that claimed to be a panacea were extremely common from the 18th century until the 20th, particularly among vendors masking addictive drugs such as cocaine, amphetamine, alcohol and opium-based concoctions or elixirs, to be sold at medicine shows as medication or products promoting health.

> https://en.wikipedia.org/wiki/Snake_oil

[ALittleLight]

It doesn't cut out any middlemen. It adds one middleman - Mark Cuban. Literally all he is doing is buying wholesale and selling retail with a markup. He's even powered by an existing online pharmacy company (truepill).

If you look up details about his factory it's supposed to be built sometime next year. On Google maps, looking at the address, I wasn't able to see any evidence of this place existing. It's also supposed to employ 60-80 people, which, seems small to take on drug manufacturing.

[s1artibartfast]

>It doesn't cut out any middlemen.

I listed two, do you disagree that they are removed?

[Scoundreller]

Is there a pharmacy that requires the use of an insurance company or a PBM? I thought involving them was always voluntary (and someones people would pay 100% of the “cash” price because it can be less than a copay).

[s1artibartfast]

Yes for PBM because that is where the pharmacy buys the drug, not the manufacturer. Manufacturers usually can't sell direct to pharmacies.

You can usually pay cash at a pharmacy, skipping insurance

[Scoundreller]

The pharmacy will buy the drug from a distributor, not the PBM. The PBM manages the insurance.

These may all be standalone operations, or one corp with its hands in each pocket: PBM, pharmacy, insurer and distributor.

[alphabettsy]

There were already many companies doing this.

[lelandfe]

Yeah. It seems the difference here is (supposedly) this sentiment:

> "People always ask, well why didn't somebody do this before? The reality is there's so much money there, it's hard not to be greedy," Mr. Cuban said

> "But I won't. I've got enough money. I'd rather f— up the drug industry in every way possible."

[ipaddr]

For a person with enough money he seems to work harder than he should to obtain more and more.

[csdvrx]

> For a person with enough money he seems to work harder than he should to obtain more and more.

Some people like to max their points in videogames. Other like to max their $ in real life.

The beauty of capitalism is that the effort of the latter end up benefiting us all.

[ipaddr]

He can't say I have enough points I don't need anymore. Use my high points as a reason to trust me that I will make less points than others if you shop here.

I also spend all of my time and energy trying to get more points.

[LordDragonfang]

>The beauty of capitalism is that the effort of the latter end up benefiting us all.

There are countless examples of that not being the case. At best, it benefits some other people most of the time and, arguably most people only some of the time.

Keep in mind that all of the current issues with US healthcare are also caused by individuals trying to maximize their personal dollars - at the expense of the general public.

[friedturkey]

Capitalism is what got America into its health care mess. Other countries aren't paying thousands for simple pills or insulin.

[csdvrx]

> "But I won't. I've got enough money. I'd rather f— up the drug industry in every way possible."

I like that sentiment!

I also like it's coming from a capitalist VC, with a profit incentive!

And I love I won't have to bother with insurance and stuff: yes, I could save $5 here and there, but no, I don't really care, and I'm not sure it's worth dealing with the insurance company who'll gather the information and look for various creative ways to compile and use the information against their clients (say, if you take tobacco cessation drugs, birth control, etc)

Yes, I know there are various laws on the books that in theory protect patients against that, but as we've seen with the consequences for say Experian data leaks, the reputational risk for Cuban himself look like a much stronger incentive that for say, Walmart or Costco or whatever company doesn't bear the investor name.

So I think Cuban will have my business!

[purplepatrick]

It’s a startup, so it’s an iterative approach. They launched with a setup that gets them into the market fast. However, you are right in that this ain’t that big of a deal.

Pharmacies pay the acquisition price for the drugs. Then, they make up a fictitious price (called the Usual & Customary price). The U&C is intentionally very high, because it forms the basis for negotiating with pharmacy benefit managers (PBMs).

The Cuban-funded venture uses this as their price comp, calling it the “retail price”. However, the U&C price is only the retail price for one group of people: those without insurance who do not know of drug discount “cards” (nowadays mostly mobile apps such as GoodRx nowadays).

Basically, anyone with insurance or a (free) discount card will get a hefty discount on the U&C (always compare the two before using insurance, as sometimes, the “regular” discount is higher than the insurance one). Just plug some of the expensive drugs into GoodRx et al to compare and you’ll find that in some geographies, the Cuban-funded co is cheaper, while in others, it is more expensive (drug discounts vary across pharmacy geo. locations).

Pharmacies give non-PBM entities discounts bec they make money regardless. Let’s say, you start an Rx discount biz. You can go to pharmacies and negotiate a discount plus a small margin for yourself. This is how GoodRx is making (lots of) money, for example.

Now, the innovation with this new co is that previously, drug discount cards and pharmacies were usually two different parties. All they did was to partner with a mail order pharmacy, negotiate a discount (acquisition + 15% is the classic Costco pharmacy price btw), set up a website, and tell everyone “look at how much cheaper we are!”.

The future vertical integration comes from taking this a step further and partnering with generic drug makers. I also suspect that at some point, they’ll start their own pharmacy.

I’ve been waiting for GoodRx or another discount provider to bundle these 2-3 steps in the distribution chain, but they have never done this. Perhaps they worried about competing with their pharmacy customers, as their model is going wide, rather than deep, while this new Cuban-funded venture is going deep instead, partnering with a single pharmacy.

Beats me why their pharmacy partner (or other such cos) wouldn’t just start adding their own discount biz. But perhaps they’re doing that and they had other reasons to do this…

[bushbaba]

Wouldn’t Amazon be doing the same thing with their pharmacy?

[s1artibartfast]

DO you have a source that the Cuban applies the 15% to the Usual & Customary Price, not the acquisition price? It has certainly been implied to be the latter.

[refurb]

Yup, as someone who had some experience in the industry, this screams naivety.

Generic drugs are pumped out for pennies a pill by a pre-existing infrastructure across the globe. Mark will be buying from them, not spending billions trying to replicate manufacturing plants and FDA agreements.

In essence it’s a cash-only pharmacy for cheap generic drugs - not that different than what Walmart and Target do with their $4/month prescription drug program.

Big pharma won’t give a shit because Mark can’t make his own generic versions due to IP.

He might make a difference for those weird edge cases like Daraprim (sp?) where the market is so small, supply is constrained, so mark ups are huge. But those are weird edge cases that don’t last long.

[dreamcompiler]

> Big pharma won’t give a shit because Mark can’t make his own generic versions due to IP.

Of course there's no IP protection; that's the definition of "generic." But that doesn't mean big pharma won't care. 20 years ago they might not have cared. Nowadays big pharma has learned how to game the generics industry to become sole-source generic providers and set prices as high as they wish, even without IP protection. It's this abuse of the generic marketplace that Cuban seems to be taking on.

[mgerdts]

it seems manufacturing is on the todo list.

https://khn.org/morning-breakout/mark-cuban-unveils-plan-to-...