Mark Cuban, the billionaire owner of the Dallas Mavericks, cast member of Shark Tank, and frequent passenger on Hillary Clinton’s campaign jet, just announced his latest venture: He plans to launch a new pharmaceutical benefit management company, or PBM, and to do so with all of the attendant “disruption” to which the modern mogul must make a burnt offering. This isn’t the first time the celebrity oligarch has waded into the health care space. Last year, he co-created the Mark Cuban Cost Plus Drug Company in order to enter the market for generic pharmaceuticals. He has even sketched out his very own health care policy plan, which, while not likely to be implemented anytime soon, nevertheless allows Cuban to spar frequently with single payer advocates on Twitter, which is pretty much one of the main reasons centrists dream up health care plans.
Cuban is hardly the first ultrarich person in recent memory to attempt to “disrupt” the health care industry: In 2018, Amazon, JP Morgan, and Berkshire Hathaway famously launched an initiative that promised to overhaul the bloated sector, only to disband three years later (without, needless to say, having succeeded). Nonetheless, Cuban has set his sights high, with a goal not just to make money but to transform how drugs are made and sold: “I could make a fortune from this,” Cuban told The Texas Monthly. “But I won’t. I’ve got enough money. I’d rather fuck up the drug industry in every way possible.”
Cuban is absolutely right about one thing: He does have enough money. But it’s perhaps less clear whether his efforts will truly put much of a crack in the drug industry’s sturdy edifice, let alone truly fuck it up. The safest bet is that, much like many other private ventures before it, Cuban’s scheme will do little to tame an out of control health care system or to blunt its devastating impact on patients. Only the public sector can do that.
One thing that Cuban has going for himself is that he is correct that PBMs are an unholy mess that illustrate the dysfunctional rot of the U.S. health care system better than anything else. PBMs are contracted by private insurers, unions, employers, and even public programs to handle prescription drug benefits, devising formularies of covered products and negotiating prices with drug manufacturers. But they do so in stealth, concealing not only how much they pay for drugs relative to how much they bill for them but also how much they get in kickbacks from drug companies.
Their opacity makes it difficult to gauge the depths of the problem. One study showed that PBMs $89.5 billion in rebates in 2016. (They’d surely say those were “passed through” to payers and patients, with they’ll trim our national prescription drug spending by about $1 trillion over the next decade.) Of course, it’s tough to imagine anyone believes that! Pharma bigwigs sure don’t, blaming PBMs for drug price hikes every chance they get.
So far, Cuban’s foray into drug pricing suggests that he rightly places the blame for stratospherically high prescription drug prices on both PBMs and the larger pharmaceutical industry, but not necessarily for the right reasons. As Cuban and his business partner Alex Oshmyansky have explained to outlets such as The Texas Monthly and Stat News, the plan is to disclose both costs and rebates openly, passing the latter onto consumers and tacking on only slight markups. “Our goal is to bring transparency to basically every level of the pharmaceutical supply chain,” Oshmyansky explained to Stat. “We’re trying to build the whole stack. Our goal is to use vertical integration for good rather than evil.”
His framework by Cuban himself: “I’m all for capitalism at its purest … but it requires capitalists acting like human beings first. If they don’t, the cost of health care goes up for everyone to the point where we can’t afford insurance and people die or receive inadequate care.… When capitalists act humanely, markets are optimally laissez-faire. When capitalists act inhumanely, the only real response is government regulation, which damages markets and increases costs across the board.”
Far from disruptive or innovative, this is a remarkably common—and remarkably silly—argument. It’s true that it’s absurdly complicated to find out how much anything costs within the health care system, and that drug prices are no exception. It’s also true that bajillions of dolts have already pointed out that this makes it unlike any other market good—gosh, can you imagine if you went to the grocery store and couldn’t figure out how much an apple was, because they’ll just bill you after the fact based on whether you pay with Visa, gift cards, or cash?
What these arguments assert, however, is the notion that it’s preferable for everyone to be endlessly comparison shopping for every medical need. Unlike the wide range of grocery stores to which we have access, it’s not always the case that a typical health insurance policy even covers more than one option to compare to another.
Furthermore, most of us aren’t forced to wander the Safeway aisles while in the throes of a medical emergency. The health care system already foists so many administrative headaches onto patients: They’re forced to navigate between plan options, argue with claims assessors over what’s covered, and play an active role in coordinating the flow of documentation and paperwork—too often between some of the planet’s only remaining fax machines. Do Americans really want to take on any more burdens than they’re already carrying? Can any honest person look at the U.S. health care system and say that the problem is that the free market isn’t being properly harnessed, and not that the market is already choking the whole thing?
And if the reason that market-based health care isn’t working boils down to “inhumane capitalists,” then why hasn’t some other nice guy cracked this egg before Mark Cuban? It’s most likely because capitalism is predicated on ever-increasing profits and endless growth, without which owners would lose investment and market share, but which are impossible to sustain without eventually harming people. Might inhumanity be its output, rather than its input?
When it comes to prescription drug prices, here’s where the problem lies: The industry is among the most powerful on earth, operating within a political and legal system that’s grossly failed to constrain it in any meaningful way. This leads payers to contract PBMs to negotiate, which they have a vested financial interest in doing badly. In response to ever-rising prices, payers push more and more costs onto patients, in the form of administrative hurdles, deductibles, co-pays, and whatever else they can pull off. It’s up to elected officials to “disrupt” this arrangement, and unfortunately, too many of them are too well compensated by the industry to consider the possibility of trying. More “transparency” isn’t going to fix this, and neither is Mark Cuban.