Prices, Transparency and Reform

On 19 January 2022 Mark Cuban Cost Plus Drug Company opened an online pharmacy with about 100 generic drugs. Its pricing fitted in one sentence: what the company paid for the drug, plus 15%, plus a $3 pharmacy fee, plus $5 shipping (reported). The examples spread quickly. Imatinib, the generic version of the leukaemia drug Gleevec, was listed at under about $50 a month against retail cash prices that could run to thousands (reported). The company had been founded in Dallas in 2018 by Alex Oshmyansky, a radiologist, as a plan to manufacture scarce generics; Cuban funded it, lent his name and set it up as a public benefit corporation. Its catalogue grew to roughly 2,000–2,500 products by 2025 (reported, verify). A June 2022 study in the Annals of Internal Medicine estimated that Medicare could have saved about $3.6 billion in 2020 on 89 generics had it paid Cost Plus prices, though critics noted that Part D prices include rebates the comparison did not fully capture. In August 2023 Blue Shield of California named Cost Plus among the vendors that would replace much of CVS Caremark's role in its pharmacy benefit.

Cost Plus does not buy most generics more cheaply than the large wholesalers; it probably pays somewhat more. Its savings come from refusing markups others add: inflated cash prices at retail pharmacies, PBM spread pricing and generics placed on high price tiers. Its significance is less its size, small next to the Big Three PBMs, than the benchmark it put in public view. It is a company built on a reform that Congress had not passed: making a price visible. This chapter explains how US reform has tried to change prices and coverage, from the Affordable Care Act to the transparency rules, and what each change did to the businesses beneath it.