Mark Cuban’s latest venture into affordable, transparent pharmaceuticals has earned lofty praise as a possible solution to spiraling drug costs. Launched in January, the Mark Cuban Cost Plus Drug Company offers a range of generic prescription pharmaceuticals at low-cost, without going through insurance plans.
Like most of his ventures, the Pittsburgh-native’s latest move to take on “big pharma” has warmed hearts in his hometown. But another University of Pittsburgh grad, Kyle McCormick, is less enthusiastic about the hype.
McCormick says he’s been running his independent store, Blueberry Pharmacy in West View, on a similar model for two years without corporate backing. And, what’s more, he agreed to a phone call with Cuban’s CEO a year before the launch of Cost Plus, during which he openly disclosed his business workings.
McCormick says he was contacted by Cost Plus CEO Alex Oshmyanski in January 2021 after tweeting about paying less than $10 per unit of anti-worm medication Albendazole, which Oshmyanski had been unable to source below $30.
McCormick believes their ensuing phone conversation convinced Oshmyanski that he would be unable to make big savings by manufacturing drugs, the company’s original plan, and to subsequently expand his model to include a pharmacy store component. He says he was approached with the understanding that Cuban’s company “was a manufacturer looking to make and sell drugs to a pharmacy,” and he would not have agreed to talk if he believed they would also be fulfilling customer prescriptions.
Oshmyasnki disputes this, telling Pittsburgh City Paper the company incorporated a pharmacy platform after struggling to recruit interest from local distributors, including McCormick’s.
“I was a little surprised Kyle knew about how to get prices significantly below ‘WAC’ [Wholesale Aquisition Cost] as well,” Oshmyanski writes, “but it’s something we had well underway at the time.”
“[W]e realized to really get everyone in America access to the real prices of drugs, we would have to partner with a mail order pharmacy,” he adds.
Cuban is more scathing of McCormick, who he accuses of “trolling” in an email to City Paper.
“We locked in the cost plus URL long before [McCormick and Oshmyansky] talked,” Cuban writes. “There isn't a single idea from him that we incorporated.”
Stepping back, McCormick says that while he would have appreciated some acknowledgement for what he shared, he isn’t wholly upset by the Cuban venture. He’s glad, ultimately, to see a major venture-capitalist throw money into a concept he’s committed to, and says he hopes it will shake up the industry and bring benefits to all.
“The frustrating thing for me is, like … they’re putting on this persona of ‘this is our original idea,’ and ‘it’s the greatest thing since sliced bread,’” McCormick adds. “And it's, like, no, it's actually already been around, it just doesn't have a major market yet. … You don’t need a famous billionaire to solve this problem.”
McCormick believes once the industry responds to Cuban’s shakeup by adjusting its prices, his local model will have an edge over Cost Plus’s mail-order service.
“My thought is that, really, Mark Cuban's not the competitor because, in reality, no pharmacy now can charge [artificial prices with more transparency in the market],” he says. “And so what will happen is, all pharmacies will have to start adopting fair and transparent pricing. And so if Giant Eagle does it, if we do it, nobody's gonna go to Mark Cuban and wait five to seven days for the drug to get to them when they can have it the same day.”
Blueberry and Cost Plus are structured in some fundamentally different ways. One is a national corporation fulfilling mail-order prescriptions to households across America; another is an independent storefront in a Pittsburgh suburb, where the owner knows most customers by name. (Our interview was interrupted several times by McCormick casually greeting customers with, “Hey, how’s it going, John?” and “Good to see ya, Steve.”)
One is a vertically integrated system involving manufacturing, supply, and consumer sales; the other simply buys from a wholesaler and sells on to customers after pocketing a flat $10 fee for his services.
But both say they’ve found solutions to an extortionist drug market that will bring real savings to ordinary people.
According to McCormick, who worked for years as a corporate pharmacist before launching Blueberry, the pharmaceutical industry is fundamentally flawed because, in the vast majority of cases, insurance providers are needlessly inserted into the equation.
Despite the lofty retail prices, once a new drug has a generic version on the market, pharmacies can generally obtain these for less than the cost of over-the-counter Tylenol. In this world, McCormick says insurance plans are no more necessary for routine prescriptions than car insurance is for routine oil changes.
“The intention for insurance was for high-cost, unknown events,” McCormick says. “With generic drugs, we have the complete opposite, with drugs that we know we're gonna have to take every month for the rest of our life. So very predictable, and low cost — less than a cup of coffee. So we should not want them to be insured. Because by adding insurance into the mix, we know that everybody is going to make money, too.”
As well as taking a cut for a needless service, McCormick says, the inclusion of insurance companies and their affiliated pharmaceutical benefit managers obscures the underlying market forces by providing cover for artificial numbers.
“The whole pharmaceutical industry is filled with prices that aren’t real prices,” he says.
For instance, the AWP — a standardized pricing used by corporate pharmacies — is typically inflated way beyond what it costs to make, and what most patients actually pay.
In the case of Dimethyl Fumarate, a generic multiple sclerosis medication McCormick carries in his store, he says the AWP is around $2,000, but he in fact buys it for $22 and sells it for $32.
While the pharmacy will bill the insurance provider $2,000, in most cases, after the plan kicks in, patients will still be on the hook for hundreds of dollars. This is the case for Karen Judeich, who told City Paper she was initially paying out of pocket for her Dimethyl Fumarate prescription after being diagnosed with Multiple Sclerosis last fall. Once she met her $4,000 deductible, her copays dropped to $300 a month — but this was still a financial hardship for someone already paying for private insurance.
“It goes through your head, ‘I can’t take on an extra $7,000 a month, so what am I going to do?’” she says.
After finding Blueberry Pharmacy through an online patient support group, Judeich now pays just $32 a month.
Not every prescription patient is guaranteed these kinds of savings at Blueberry. And McCormick says insurance can help bring costs down for newer drugs where generic options aren’t available.
“We're not convincing a lot of patients that have $0 copays,” McCormick acknowledges. “Whenever the patient directly can see that they save, it's a lot easier sales pitch.”
Customers without insurance plans like Westview resident Nancy Glass and Pittsburgh resident Herman Holl — who both identify as “between private plans and Medicare” — are obvious beneficiaries of Blueberry’s model. But McCormick says many continue to save after they enroll in Medicare, and others, like Judeich, benefit while on private plans.
McCormick says beyond finding individual savings for his customers, he’s motivated by the bigger goal of bringing transparency to the pharmaceutical marketplace, which he hopes could bring savings to all. To that end, he lauds Cuban’s venture as an ally in a greater fight against vested interests.
“If I zoom out, this is a MASSIVE win towards moving the needle on transparency,” McCormick writes in a blog post reflecting on the launch of Cost Plus. “Now the challenge is reshaping this move towards our vision so that affordable care is WITHIN every community.”
Blueberry Pharmacy. 1018 W. View Park Drive, West View. blueberrypharmacy.com
Cost Plus Drug Company. costplusdrugs.com