Medicare could have saved up to $3.6 billion in 2020 if it purchased generic drugs at the prices paid by billionaire entrepreneur Mark Cuban’s pharmaceutical company, a new study has found.
The to study from Researchers from Brigham and Women’s Hospital in Boston, published in the journal Annals of Internal Medicine, suggest inefficiencies in how Medicare currently pays for generic drugs.
The Mark Cuban Cost Plus Drug Company, which launched online earlier this year, seeks to simplify the convoluted drug supply chain and provide savings to consumers. It offers commonly used generic drugs at a 15% markup, plus a $3 dispensing fee and a $5 shipping fee. It does not accept insurance, which means patients pay out of pocket.
This simplified model offers significant savings, according to the study. The $3.6 billion in savings represents 37 percent of the $9.6 billion Medicare spent on the 89 drugs examined in the study. There were savings to be made on 77 of these drugs, and 12 without savings.
“Generic drug competition is a major source of prescription drug savings in the United States, but the lower prices of a direct-to-consumer model highlight the inefficiencies of the existing system of distribution and pharmaceutical reimbursement, which includes wholesalers, pharmacy benefit managers, pharmacies, and insurers,” the study said. “According to one estimate, this supply chain retains 64% of every dollar spent on generic drugs, vs. 25% of every dollar spent on brand name drugs before rebates.”
Cuban tweeted at President Biden and a series of congressional leaders with a link to the study, saying, “Ask your people to call my people and let’s do it.”
Cuban’s efforts and the study focus on generic drugs, which are already generally cheaper and older drugs than brand name drugs.
Congressional efforts to change how Medicare pays for drugs have focused primarily on the most expensive brand name drugs. Democrats are pushing a proposal to allow Medicare to negotiate lower prices on some of these drugs, a longtime goal for the party.
The study authors conclude that policy efforts in price transparency, increased competition, and containment of pharmacy and dispensing costs could allow the Cuban company to achieve savings similar to Medicare in its together.