Day: November 17, 2022

Mark Cuban, the tech titan, Dallas Mavericks owner, and star of ABC’s Shark Tank, moves through the world like a friendly great white, all teeth and eyes and relentless motion. When we meet on an October morning at his office in the Mavericks’ headquarters, the serial entrepreneur, 64, is wearing a long-sleeved T-shirt advertising his last investment: Mark Cuban Cost Plus Drug Co. I was there to find out why a guy who’s made billions in tech, won an NBA championship, and become perhaps the most popular businessman on reality TV was spending his time and fortune hawking generic anti-fungal medications online for $7.34.

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“To f–k things up,” Cuban explains. “That’s what capitalism is all about. Capitalism isn’t just, ‘Everybody should make as much money as they can.’ Capitalism is about finding solutions to problems and seeing what you can do to solve them.”

Cost Plus Drugs, which launched in January, is Cuban’s attempt to prove that disruption can be a form of benevolence. The for-profit online pharmacy aims to undercut the health care industry by selling generic drugs for everything from asthma to glaucoma to rheumatoid arthritis for a fraction of the typical price. Cuban likes to say that the company’s real product is transparency: in an industry where hospitals can sell cancer drugs at a 600% markup, Cost Plus sells generic medications for the cost of manufacturing them, plus a 15% markup and shipping fees. The goal, says Cuban, is to become the biggest low-cost provider of medication in America.

Though Cuban won’t say exactly how much of the company he owns, he calls the new online pharmacy a win-win. If established pharmacies keep charging patients artificially high prices, Cost Plus may emerge as a popular low-cost alternative. If the industry slashes consumer prices to compete, he’ll have almost single-­handedly brought reform to an industry that stubbornly resists it. “The incumbents could come along and copy us, get a heart, get a conscience,” Cuban says. “That would be OK.”

For decades, politicians have been promising to reduce the cost of prescription drugs, and for decades, they’ve mostly failed. To Cuban, the persistent inability to address runaway drug pricing has reinforced his dim view of the political system’s ability to solve big problems. He not only believes the health care system is broken. He also thinks American government is too messed up to fix it.

For a guy who expresses himself through assets and acquisitions (plus the occasional podcast episode), Cost Plus Drugs represents a billionaire’s search for meaning in a world that’s increasingly skeptical of the power of the über-rich. Cuban’s counterparts in the 0.01% have become political mega­donors, started global foundations, become patrons of the arts and humanities. He prefers to build his legacy the way he’s built his fortune: through entrepreneurship. Cost Plus Drugs is a kind of middle path between progressive reform and philanthropic giving, one that aims to disrupt predatory markets as a way of regulating them.

The venture has a long way to go to upend the $1.4 trillion pharmaceutical industry. Cost Plus Drugs offers about 1,000 medications in the U.S.—a small fraction of the drugs available—and does not yet take most insurance, although Cuban says that will change in 2023. While some customers say Cost Plus has lowered their medical bills, it’s too early to tell whether the model can scale. “Mark Cuban has managed to disrupt a very small slice of the health care system,” says Larry Levitt, executive vice president at the nonpartisan health-­policy organization KFF, who called out-of-pocket generic drugs the “low-­hanging fruit” of the system. “It remains to be seen whether he can figure out a way to expand that slice.”

Cuban’s email address is publicly available, and hundreds of investment pitches land in his inbox every week. He reads the first paragraph and deletes them 99% of the time, he says. But in 2018, Cuban got a cold email from Dr. Alex Oshmyansky, a radiologist, asking if he would consider investing in a company that sells generic medications for roughly the cost of production. He responded within five minutes. “The more questions I asked him about the drug side of things,” Cuban says, “the more obvious it was that there was an opportunity there.”

You might not expect that an entrepreneur as buzzy as Cuban would be drawn to the world of generic pharmaceuticals. But long before Oshmyansky’s email landed in his inbox, Cuban had been interested in the inefficiencies in the health care industry. He had taken note of the controversy surrounding “pharma bro” Martin Shkreli, who in 2015 jacked up the price of Daraprim, a lifesaving antiparasitic drug, from $13.50 to $750 per pill. “If the pharma bro can jack up prices, that means that there’s some distortion of pricing,” Cuban says. “And there must be a way to reduce them the same way.” Watching President Trump and congressional Republicans work to eliminate the Affordable Care Act without a viable replacement, he adds, convinced him that the two-party system was not well equipped to handle health care.

Cuban pushed Oshmyansky, who launched the company as a nonprofit in 2015, to turn the enterprise into a for-profit company, arguing it would be more sustainable if it weren’t reliant on fund­raising. His fortune has created a long runway, and his fame has allowed him to spread the word about an enterprise that might have otherwise languished in obscurity. “It’s not even so much Mark’s capital. It’s his celebrity that has been the magic key that’s unlocked a lot of this,” says Oshmyansky. “Mark’s platform is actually much more valuable than the capital he’s able to provide.”

The company has had some growing pains. Its staff of 33 has struggled to keep up with skyrocketing demand, even as the menu of drugs the company offers remains limited. (Selling each drug requires complex negotiations with manufacturers and regulators, and Cost Plus Drugs doesn’t yet offer medications like insulin, misoprostol, or epinephrine auto-­injectors for peanut allergies.) They’re building a manufacturing plant near its Dallas headquarters to make drugs on-site, but it won’t be finished for months. Some customers have complained that their medications take too long to arrive, or that customer service is slow. Cuban says these are the growing pains of a bare-bones team trying to serve more than 1.3 million accounts.

Other customers say that Cost Plus has already helped them. Andrew Hums, a 37-year-old auto salesman in Pennsylvania, says he saved more than $600 on a three-month prescription for an assortment of diabetes and blood-­pressure medication. “That’s more than a car payment for most people,” he says. “For some people, that’s rent.”

Cuban, who’s worth an estimated $4.6 billion, says he’s not in it to “make my next dollar.” Nor is he interested in a run for political office, despite the long-­standing rumors. “That’s the one thing I know I’d suck at,” he says. Instead, Cost Plus Drugs is part of a playbook to use his fortune for a new type of benevolent disruption. “I could go on to the next thing, and the next thing and the next thing,” he says. “But it wouldn’t be as a politician; it would be as a capitalist.”