by Angela Maas
Self-insured employers often struggle with not only getting their pharmacy costs under control but also simply understanding the dynamics behind those costs. But resources such as biosimilars and cash-pay options are among the obvious options that companies can take advantage of now, asserted Mark Cuban, co-founder of Mark Cuban Cost Plus Drug Company, during a recent fireside chat with Scripta Insights.
While the company has been disrupting the drug industry for almost four years now, its future plans hold tremendous promise, including the low-cost, rapid manufacture of n-of-1 drugs, Cuban revealed during the discussion with Eric Levin, Scripta’s CEO.
Levin observed that Cuban has “spent the last couple of years really urging CEOs to…blow up the system and stop letting PBMs dictate cost and transparency.” But that’s easier said than done, he said, as “no one employer, even the large ones, has the leverage to fix health care. They’re there to run their business, not fix health care.” So how can self-insured employers manage the practical challenges within the current health care system and secure better pricing, he asked.
Cuban asserted that educating CEOs on how the system works is the biggest barrier: “The challenge is making them understand that there are alternatives,” he said, citing cash pay options and biosimilars.
For example, Cost Plus Drugs offers two 40 mg/0.8ml pen injectors of the biosimilar Yusimry (adalimumab-aqvh) from Coherus BioSciences, Inc. for $526.75, more than 85% off the wholesale acquisition cost (WAC) of its reference drug, AbbVie Inc.’s Humira (adalimumab).
And in a recently unveiled deal, the Cost Plus Drugs website offers one 90 mg/mL prefilled syringe of Hikma Pharmaceuticals USA Inc.’s biosimilar Starjemza (ustekinumab-hmny) for $345.00 – a price of $1,380 per year. That compares with an annual price of $165,000 for the reference drug, Stelara (ustekinumab) from Johnson & Johnson Innovative Medicine.
“There is a lot of low-hanging fruit,” maintained Cuban.
He also pointed out that both public and private self-insured employers can require in their contracts that members’ cash-pay purchases count against their deductibles. “If you’re self-insured, it’s your contract. You get to write it the way you want,” Cuban said. “And if insurance company No. 1 that has its own captive PBM won’t do it, talk to insurance company No. 2. And tell your consultant; if your consultant really is [on the] up and up,…they should have already been all over it.”
He also noted that some states, including Texas and Tennessee, have laws in place mandating that when members submit a receipt “whether it’s [for] an MRI or it’s a drug from Cost Plus Drugs,…they are allowed to apply it to their deductible.”
Cost Plus Drugs was one of the companies behind the growing direct-to-consumer trend, skipping the current PBM-managed system in lieu of offering certain agents directly to patients. As pharma manufacturers have begun taking a similar approach with some of their products, the current administration has joined in with TrumpRx, which will serve as a portal for best prices. While it won’t process any orders but rather pass them along to Cost Plus Drugs and participating manufacturers, TrumpRx will have a publicly available price list that self-insured employers can use to compare to what they’re actually paying after rebates and other fees, explained Cuban.
Are GPOs Necessary?
Levin noted that PBMs offer market basket pricing that is focused on total spend; some agents may be more costly, others may not, but overall prices will be lower. However, that can produce “outliers that make it look bad or that can create confusion,” he noted. And while self-insured companies have said that they’re bidding for new PBMs, many of them in fact stayed with their existing PBMs, some of which — he specifically cited CVS Caremark — have claimed that they are lowering prices.
These PBMs, asserted Cuban, should be transparent: “If you’re so good at negotiating prices, and you’ve got all this scale, then just show me your prices. Show me your rebates.” He questioned why the companies needed group purchasing organizations (GPOs) that negotiate rebates as opposed to the PBMs doing it themselves.
“You’re…part of a multihundred billion-dollar company. Why do you need to create the subsidiary?” he asked. “Because that’s how they game the system. And by doing it on a market basket basis, that’s how they auction off their formularies.” PBMs claim they are negotiating better pricing, but “that’s the biggest lie in all of pharmacy,” he stated. If that were true, they would negotiate prices not only on generics but also on brands, he contended.
According to Cuban, “I guarantee” that PBM clients’ contracts contain language indicating that “‘from time to time, we may charge you fees for various things, and you don’t know what those fees are until they happen.’ And then there’s other places where they’ll charge you a percent of WAC in fees. If you have anywhere in a contract charging you a percentage of WAC for anything, they are stealing from you.”
Another occurrence to be aware of is that “a big chunk” of consultants “have financial relationships with the big PBMs,” but they don’t disclose that information. Legally, though, if asked about that, consultants must divulge those relationships.
When Levin commented that “I think there’s a lot of them [consultants] that are out there trying to do the right thing,” Cuban responded, “I’m not saying they’re not trying to do the right thing. I’m just saying they’re getting compensated. They’re not necessarily mutually exclusive, right?”
Companies also should make sure that they include in their contracts the ability to audit all claims, he said. “All the companies I’ve talked to that have audited their claims, none of them have been overpaid in rebates — not one single one — and every single one of them has been underpaid in rebates or overcharged in fees.”
When confronted with all this information, CEOs often are surprised, said Cuban, who said he encourages them to speak with their PBM — and compare their net prices with his company’s price list — about these issues.
AI, Robotics Will Help Spur Developments
Changes are coming to Cost Plus Drugs, Cuban revealed.
For one, the company is “in the process of expanding our manufacturing, and because we use AI and robotics, we think we’ll be able to manufacture a lot of single molecule tablets for less than we can buy them from India. And when you go to Cost Plus Drugs, hopefully 12 to 18 months from now, you’ll see a page that comes up that’s red, white, and blue, and…you’ll see in our price list the little flag next to it showing that it’s made in the United States of America. And we think we can get the price the same or cheaper because of the delta in shipping costs. And so we’re trying to control our own destiny all the way through and be vertically integrated and be the low-cost provider in all cases.”
Cost Plus Drugs also is looking into manufacturing its own active pharmaceutical ingredients (APIs), he said, a lesson learned during the COVID-19 pandemic: “When critical drugs aren’t made here, that can be a huge problem.” However, to make APIs, key starter materials are needed, and “there’s going to be certain things that we can’t do,” he said.
To boost its capabilities, his company is developing pods that are similar to tractor trailers “where we can put all of our manufacturing…and take it anywhere there’s an emergency, a disaster, and manufacture everything.”
Within the next couple of years, Cost Plus Drugs is aiming to use these pods to make n-of-1 drugs for a single patient. “We’ll put it outside research centers so that” if they have a child who needs a drug specific to their genetic makeup, “the hospital, instead of spending half a million dollars and waiting two months [for a new drug] can spend $50,000, wait two hours and see if it works on the child, modify it, and then we can make it again all in the parking lot.”
“I think there’s a lot of reasons to be extremely hopeful about the future of medicine because of AI and personalized medicine,” said Levin. “This is incredible stuff.”