Savings on Generic Drugs Through the Mark Cuban Cost Plus Drug Company (2024)

Research Letter

RamezKouzy,MD1; Molly B.El Alam,MPH1; Kelsey L.Corrigan,MD, MPH1; et al Hussain S.Lalani,MD, MPH, MSc2,3; Ethan B.Ludmir,MD1,4,5

Author Affiliations Article Information

In 2022, the Mark Cuban Cost Plus Drug Company (MCCPDC) started selling generic prescription drugs through a transparent, online direct-to-consumer pharmacy model. While potential Medicare Part D plan savings achieved by using MCCPDC have been estimated at over $3 billion for a subset of 77 generic drugs, individual patient-level savings have not been quantified, to our knowledge.¹ We estimated the out-of-pocket cost savings patients could achieve if they purchased drugs directly from MCCPDC instead of using their health insurance.

This economic evaluation used the 2019 Medical Expenditure Panel Survey (MEPS), a publicly available, nationally representative survey of individuals and families. We matched generic medicines sold online by MCCPDC in March 2023 to prescriptions filled in MEPS using codes from the National Drug Code Directory, drug name, strength, and quantity. We focused on tablets and capsules in 30- and 90-pill quantities and identified 124 generic drugs for the analysis (eAppendix in Supplement 1).² Race and ethnicity data were not collected because this study focused on the insurance status of individuals rather than their demographic composition. We followed the CHEERS reporting guideline. This study did not require institutional review based on the criteria of the Common Rule (45 CFR §46) because it used publicly accessible, deidentified data.

To account for potential differences in drug costs from 2019 to 2023, we adjusted out-of-pocket costs in MEPS using the drug-specific percentage change in the National Average Drug Acquisition Cost.³ We limited out-of-pocket costs for prescriptions for individuals with Medicaid insurance to $8 per fill, consistent with federal regulations. We compared the difference in patients’ out-of-pocket costs in MEPS with MCCPDC prices to estimate possible savings for a 30- or 90-pill supply of each generic drug, stratified by insurance type (Medicare, Medicaid, military, private, or uninsured), including $5 shipping costs for MCCPDC. Data were weighted to account for the complex survey design. Analyses were performed using R software, version 4.3.0.

This study identified potential out-of-pocket cost savings in 99 696 682 of 843 713 380 weighted prescription pharmacy fills (11.8%) among 124 generic drugs. No cost savings were observed among patients with Medicaid insurance; percentage of filled prescriptions with savings varied by health insurance: Medicare, 5.5% (14 987 248 of 272 381 168 fills); private, 7.1% (14 679 121 of 207 387 159); military, 9.9% (2 378 664 of 3 993 897); and uninsured, 28.9% (5 000 260 of 12 220 292) (Figure). Median (IQR) estimated cost savings per prescription was $4.96 ($1.95-$11.39); savings were highest for uninsured individuals: $6.08 ($1.87-$10.38). Median (IQR) savings per filled prescription was $5.05 ($2.59-$7.66) for military insurance, $4.64 ($1.89-$10.19) for Medicare, and $3.69 ($1.77-$8.99) for private insurance. Among fills with cost savings, 50.3% had savings less than $5, while 28.4% had savings greater than $10. A sample of generic drugs with savings is presented in the Table.

This economic evaluation found that patients could have spent less on 11.8% of prescriptions filled for 124 generic drugs in 2019 if they had been purchased from MCCPDC instead of using their health insurance. The estimated cost savings was approximately $5 per prescription, including shipping. Savings varied substantially by health insurance type, with uninsured patients achieving the greatest benefit. Our findings are consistent with an analysis of Costco’s direct-to-consumer pharmacy, which found that higher spending occurred in 11% of Medicare Part D claims.⁴ In contrast, an analysis of the 20 most-prescribed generic drugs found that out-of-pocket costs for 20% of prescriptions exceeded prices for Prime members at Amazon Pharmacy.⁵ With generic drugs constituting 90% of all dispensed prescriptions, some patients can benefit from a transparent cost-plus pharmacy pricing model; however, for most, it is less expensive to use their health insurance benefits. Although MCCPDC sells most common generic drugs, only 26% of expensive generic drugs were available in May 2023.⁶

Limitations of our study include its cross-sectional nature. The cost and supply of prescription drugs sold by MCCPDC change frequently. Our analysis was limited to MCCPDC mail-order prescriptions; we did not evaluate the potential cost savings of in-person pickup. Promoting transparent cost-plus pharmacy models, such as MCCPDC, can reduce out-of-pocket costs for a specific subset of patients.

Accepted for Publication: April 23, 2024.

Published: June 14, 2024. doi:10.1001/jamahealthforum.2024.1468

Open Access: This is an open access article distributed under the terms of the CC-BY License. © 2024 Kouzy R et al. JAMA Health Forum.

Corresponding Author: Ethan B. Ludmir, MD, Division of Radiation Oncology, The University of Texas MD Anderson Cancer Center, 1515 Holcombe Blvd, Unit 1050, Houston, TX 77030 (ebludmir@mdanderson.org).

Author Contributions: Dr Kouzy had full access to all of the data in the study and takes responsibility for the integrity of the data and the accuracy of the data analysis. Drs Lalani and Ludmir contributed equally as senior authors.

Concept and design: Kouzy, Lalani, Ludmir.

Acquisition, analysis, or interpretation of data: All authors.

Drafting of the manuscript: Kouzy, Corrigan, Lalani, Ludmir.

Critical review of the manuscript for important intellectual content: All authors.

Statistical analysis: Kouzy, El Alam, Corrigan, Ludmir.

Administrative, technical, or material support: Lalani, Ludmir.

Supervision: Lalani, Ludmir.

Conflict of Interest Disclosures: None reported.

Funding/Support: This work was supported by the Cancer Center Support (Core) grant P30 CA016672 from the National Cancer Institute, National Institutes of Health to The University of Texas MD Anderson Cancer Center; the Sabin Family Foundation Fellowship (Dr Ludmir); and the Fund for Innovation in Cancer Informatics (Dr Ludmir). Dr Lalani’s work was supported in part by a grant to the Program on Regulation, Therapeutics, and Law (PORTAL) from Arnold Ventures and the Commonwealth Fund.

Role of the Funder/Sponsor: The funders had no role in the design and conduct of the study; collection, management, analysis, and interpretation of the data; preparation, review, or approval of the manuscript; and decision to submit the manuscript for publication.

Data Sharing Statement: See Supplement 2.

Additional Contributions: We thank David Levine, MD, and Christopher Cai, MD, of Brigham and Women’s Hospital for sharing their expertise on the Medical Expenditure Panel Survey dataset. We also gratefully acknowledge mentorship from the late Cullen M. Taniguchi, MD, PhD. None of the individuals were compensated for their contributions.