Opinion | Can Mark Cuban help save the pharmaceutical industry from itself?

It’s nice to see initiatives such as billionaire investor Mark Cuban’s latest effort, the Cost Plus Drug Co. The online pharmacy, which opened for business recently, will almost certainly be, in some cases, literally a lifesaver. It is offering a select group of generic medications for the manufacturer’s cost plus a 15 percent markup and a $3 service fee.

For the uninsured and underinsured — Cost Plus doesn’t currently take insurance — this has the potential to be lifesaving. Cost Plus is selling imatinib, the generic version of blood cancer miracle drug Gleevec, for $17.10 a month. Its list price is just north of $2,500. Even the insured are finding paying Cost Plus directly can sometimes amount to significant savings.

But no matter how successful Cuban’s business is, it can’t come close to addressing the overall problem that really needs solving: the question of why prices for prescription drugs are so high in the United States.

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Americans pay more — significantly more — for prescription medications than people do in other countries. That’s true for branded drugs under patent, and that’s true for prescriptions that have generic equivalents. The U.S. government, unlike every other developed country, does not negotiate with the pharmaceutical industry to determine the price we pay for their offerings. That’s a major reason that the United States is a cash cow for drug companies.

This system has been impervious to almost every effort to restrict it. Legislation to permit Medicare to negotiate drug prices falls by the wayside time and time again, despite the idea’s enormous popularity. That’s almost certainly due to the influence of Big Pharma money in Congress. No matter what reform gets discussed, sooner or later, someone steps forward to oppose it.

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The result: According to a December poll from the Kaiser Family Foundation, a quarter of all Americans say they have experienced trouble paying for prescribed medications, with 16 percent saying they have not filled a prescription because they couldn’t afford the bill. Medicare helps but is far from a full solution: A study conducted by the Department of Health and Human Services found that, in 2019, 3.5 million Medicare recipients over the age of 65 reported they had difficulty affording their prescription drug bills.

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Cuban’s latest business can likely make a dent in this. But make no mistake: Generics are, for the most part, the low-hanging fruit of pharmaceutical costs. Patients often pay high markups because of deals between insurers, pharmaceutical companies and pharmacy benefit managers. But multiple producers make for a competitive market, which leaves room for a disrupter such as Cuban.

Breaking into selling branded, patented drugs at a significant discount, however, would be a much harder lift. For drugs under patent in the United States, Big Pharma has a lot more power to set the price we pay — and they make the most of it. A report released late last year by the House Committee on Oversight and Reform found that Medicare would have saved $25 billion in a five-year period on the price it paid for seven popular drugs if it could have negotiated in a way similar to other federal programs with such authority, such as those managed by the Department of Veterans Affairs. The report also found companies take steps to maintain their patents — often successful — to head off competition and maintain their profits.

While Cost Plus will help many Americans, we can’t simply rely on the private market — even when it’s on the side of the angels — to make the high cost of prescription drugs go away. Those charges are occurring because the pharmaceutical industry is using its weight and muscle to make it so. The only solution to this issue is to take it on with an even more powerful entity: the U.S. government.