How does Mark Cuban’s prescription drug site work?


How are they able to offer generic brands of prescription drugs at such low prices? What do they do differently from traditional pharmacies to offer the drugs so incredibly cheap?

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Their biggest difference is that they don’t file insurance claims at all.

That change cuts off a large overhead from the business.

If I remember correctly, he actually created labs to make those generics .

So he’s producing and selling them all directly. Cuts out a lot of overhead, and if your goal isn’t to price gouge (from what I understand, he started all this to offer them as cheap as possibly while still staying in the black, business wise), you can sell them much cheaper than competitors who’re trying to squeeze every cent they can out of you.

Sometimes the filler is different. drug doesn’t only contain active ingredient, they also have filler that helps increase the size of pills and sometimes aids the body’s ability to absorb it. Generic medicine usually cheap out on filler. Like for example now I’m always carrying 2 types of Cetirizine, the first one is the generic one, ¢30/10 pills, and the prescription one which is $1/pill. The generic one work slowly, it could take 1-2 hours before my rashes subsides, but the prescribed one only take 5 minutes at most, so I mostly use the first one and the prescribed one is the “break out the glass” emergency medicine like if my face suddenly become very puffy.

Ofc the biggest overhead is likely still the administrative, not the material.

This is a complicated topic, but I will try to keep this as simple as possible

Drug prices in the US are heavily manipulated by drug companies. For most drugs, the company that makes it has an ‘advertised’ price (Called AWP in pharmacy terms). This is a price that the drug company has made up, and it may have nothing to do with a real price the drug is sold for. The drug company then sells drugs to a wholesaler for a ‘secret’ price. Wholesalers operate warehouses and storage around the country, and when a pharmacy (like Walgreens or CVS) needs a drug to fill a prescription, they buy it from a wholesaler for another secret price. The pharmacy then sells it to the patient based on the ‘advertised’ price of the drug. The difference between the secret price and the advertised price is how the pharmacy makes their money.

People without insurance usually have to pay the full advertised price. For people with insurance, the insurance knows that the prices are different, and negotiates with the pharmacy for a large discount, so their members don’t get charged as much as people without insurance.

The problem is, for many drugs out there the ‘advertised’ price of the drug and the ‘secret’ price of the drug have nothing to do with each other. In some cases the advertised price may be hundreds, or even thousands of times higher than the secret price the pharmacy is actually buying it for. For example, the drug Ondansetron (a common nausea medication) has an advertised price of around $30/pill, but the secret price pharmacies buy it for is actually known to be less than $0.10/pill.

What Cuban’s pharmacy does is to sell drugs for the secret price they purchased them for with no markup. They then charge a flat fee on top of that, which is how they make their money to pay their staff and run their pharmacy. However, not all drugs (especially new brand name drugs) have secret prices and advertised prices that are all that different. So Cuban’s pharmacy can’t offer a huge discount on those, like they can with many generic drugs. Generic drugs often have very different secret and advertised prices. In the industry this is called ‘pass through’ pricing.

The actual manufacturing costs of manufacturing generic drugs is pretty low outside of the initial investment, which is why they are generally cheaper everywhere but the US. Others talked about not dealing with insurance and all of that, which is very much true, but the typical way drugs are priced is that you are charging for the manufacturing and distributing costs, as well as sunk R&D costs spent by the original developer of the drug. Since that’s how things generally work, and people generally are willing to pay that kind of price in the US, that’s what most companies charge, but it doesn’t inherently have to be like that, especially when not dealing with other companies in the industry.