Mark Cuban Explains How He Built an Online Pharmacy

Bringing change to the healthcare industry

Mark Cuban, owner of the Dallas Mavericks and an investor/shark on ABC's Shark Tank, launched an online pharmacy—Cost Plus Drugs—at the start of 2022. The premise is simple: cut out middlemen and battle the pharmaceutical industry's steep price hikes by offering generic drugs at deep discounts, without going through insurance.

Cost Plus customers pay the manufacturing price for drugs, plus a 15 percent markup and $5 each for labor and shipping.

As an example, let's break down the thyroid medication Levothyroxine. This generic version of Synthroid carries a retail price of $15.94 for a 30-day supply. It can be purchased on Cost Plus for $6.20, a savings of $9.74 a month.

A more extreme case: Imatinib, the generic form of Gleevec, used to treat leukemia and other cancers. Its retail price is $2,502 for a 30-day supply. Through Cuban's venture, it costs $13.40, saving customers $2,489.

Profound discounts aside, another intriguing aspect, from an advertising perspective, is the sheer lack of promotion. Cuban drummed up support through his social platforms and made the media rounds at launch. But he never put ad dollars behind the website, relying instead on word of mouth.

"When you save someone tens, hundreds or thousands of dollars on a prescription, they tell other patients in similar circumstances. They go online to forums and talk about us," he tells Muse.

"Patients know others who can't afford their meds. It feels good to help those people by telling them about Cost Plus Drugs. Our customers have done the most to drive our growth."

Cost Plus took four years to create, and prides itself on transparency. If a drug fluctuates in price, up or down, rates are adjusted accordingly, and consumers kept informed. When the cost decreases, that savings is passed on to customers.

"Our biggest product feature is trust," Cuban tells Muse. "We show you how much we pay for your medication, that our markup is 15 percent, and we show you what our shipping and pharmacist costs are. That's unique in the pharma business. That transparency built trust among our customers, who in turn felt confident recommending us to their doctors and others they knew who were on medications."

Drugs are purchased from FDA-approved manufacturers—and the company promises it will never sell your data. The top 10 of drugs purchased through the site varies constantly, but mostly consist of men's health and cancer treatments.

By year's end, Cost Plus will begin manufacturing drugs, including "generic injectables that are in short supply, starting with pediatric oncology meds," says Cuban.

The biggest challenge at startup was "getting all the licenses and getting manufacturers to trust us," he says. "They thought we were one more company talking a big game that would go nowhere. Fortunately, we were able to show them differently."

An obstinate obstacle, per Cuban, is "trying to scale with our growth. We are growing so fast, sometimes we fall behind on orders, which we hate."

That positive trajectory is spurred by an expanding customer base and partnerships with big companies. Just last month, Blue Shield of California dropped CVS Caremark for Abarca, Amazon and Cost Plus, in an effort to drive down prices and save the health insurer $500 million.

"It's a big deal. BSC is a very forward-thinking company," says Cuban. "We also have partnerships with different organizations that focus on specific diseases like Wilson's disease and Multiple Sclerosis. So, their patient population knows how much we can save them."

He's also proud of the Team Cuban Card—"I didn't name it!" he notes. Patients who can't wait for their meds to arrive by mail can instead opt online to pick up prescriptions at local pharmacies and more than 2,500 Kroger locations.

Cuban says he's just getting started, with more to come soon in the healthcare space.

"I think the insurance side of the industry is broken," he explains. "There are some working on changing it who we have partnered with. But the biggest companies are at the heart of the issue. The healthcare industry is so vertically integrated, with so many affiliated companies, that they are able to respond to legislation or bad PR by moving costs to patients from one subsidiary to another. It's rare when they take a hit."

The long-term goal, apart from supplying medications, is to help correct the imbalances in the system and keep as many folks as possible from "getting ripped off," he says.

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