New Good Medicine: Mark Cuban
In the last Good Medicine episode Dr. Zeke Emanuel reflected that the US healthcare system is broken because of its complexity. And in this episode we explore more of that—What if the biggest barrier to affordable healthcare isn’t the cost of drugs, but the intentional complexity designed to hide where the money actually goes?
In our latest episode, I sat down with Mark Cuban: entrepreneur, Shark Tank host, and founder of Mark Cuban Cost Plus Drug Company. What started as curiosity about how one “Pharma Bro” could jack up generic drug prices 7,500% has evolved into a mission to dismantle pharmaceutical industry pricing games and help millions of Americans access affordable medication.
Mark brings trademark intensity to healthcare with a genuine desire to let doctors get back to doctoring. We cover:
Follow Your Effort, Not Your Passion: Mark flips career advice on its head—curiosity and willingness to learn matter more than childhood dreams. It’s just the reality of success, and it’s what took him from selling garbage bags at age 12 to disrupting healthcare today.
The Trust Formula: Trust = Transparency ÷ Self-Interest. This equation governs Cost Plus’s 15% markup model. When you see the actual cost, markup, and shipping fee, you’re not just buying drugs—you’re growing trust.
Hospitals as Subprime Lenders: High-deductible plans have forced hospitals to absorb hundreds of billions in unpaid medical debt. Combined with insurance company games, this creates a cascade, squeezing doctors and patients alike.
The PBM Money Flow Exposed: A explanation of how pharmacy benefit managers game the system. On a $600 drug, the PBM might pocket $400+ while the manufacturer nets $240. Mark reveals rebate GPOs, overseas subsidiaries, and the tricks hiding in contract fine print.
Direct Contracting: Cost Plus Wellness offers hospitals transparent pricing, immediate cash payment, and zero pre-authorizations. It’s working—9,000+ providers and growing—proving doctors could spend less time on paperwork.
Manufacturing Pods in Parking Lots: Robotic manufacturing units that could produce sterile injectables, biosimilars, and personalized gene therapies on-site. What takes weeks and costs $500,000 could happen in days for $50,000.
Why Brand Manufacturers Won’t Sell to Cost Plus: PBMs block it. If Cost Plus sold Eliquis at cost-plus-15%, patients and employers would see the $300+ savings from PBM fees—threatening the entire rebate ecosystem.
AI and Medical IP: When research institutions silo their data for proprietary AI models, knowing which models to use and how to aggregate outputs becomes a critical medical skill—increasing doctor value, not decreasing it.
Mark’s Message to Doctors: You’re underpaid and overworked because of administrative waste. Healthcare economics are simple: cost, payment, and risk. Solve the deductible guarantee problem, disaggregate insurance companies, reform PBMs—problem solved?
If you enjoyed this, please forward or text to a friend.
If you’re a physician, continue the conversation on Roon related to Mark’s episode.
New Good Medicine episodes are released every other week.
For more from Roon, visit: www.roon.com
Find us on Instagram and X: @roondoctors
If you have a question, comment, or suggestion for a future guest, please email us: jane@roon.care
Transcript:
Rohan Ramakrishna (00:00:04): Welcome to Good Medicine, a podcast about the ideas, people, and conversations shaping the future of healthcare. I’m your host, Dr. Rohan Ramakrishna, neurosurgeon and co-founder of Roon. Each episode, we explore how medicine is evolving through honest conversations with leaders and changemakers. Good Medicine is brought to you by Roon, the digital home for doctors. We’re a free physicians-only community to connect, share knowledge, and shape the future of medicine.
(00:00:38): Mark Cuban is one of the most recognizable faces in American business, but recently he has taken on perhaps his biggest opponent yet: the U.S. healthcare system. He’s the founder of the Mark Cuban Cost Plus Drug Company, a public benefit corporation dedicated to radically lowering the price of prescription drugs. In this episode, we trace Mark’s journey from his very first hustle at age 12, selling garbage bags door to door to buy basketball shoes, to his current mission to dismantle the opaque pricing models of the pharmaceutical industry. We discussed the origin story of Cost Plus Drugs, why he believes hospitals have been forced into the role of subprime lenders, and his strategic advice for how doctors and hospitals can break free from the administrative burden of big insurance. A few things from our conversation really stuck with me. First, Mark completely flips the standard career advice on its head. He argues you shouldn’t just follow your passion, but rather follow your effort.
(00:01:40): It’s a pragmatic look at how curiosity and the willingness to learn—even if it’s just reading the manual at a software store—can lead to unexpected success. Second, he breaks down his formula for trust. Mark explains that trust equals transparency divided by self-interest. This is the governing philosophy behind his 15% markup model. He argues that the healthcare industry has eroded trust through opacity, and the only way to win it back is by showing your math. Third, we go deep into the mishigas—to use Mark’s word—of pharmacy benefit managers, or PBMs. Mark gives a crash course on the flow of money in the drug supply chain, exposing exactly how rebates and intermediaries inflate costs for patients while squeezing providers. He also shares a fascinating vision for the future of manufacturing where hospitals could use robotic pods in their parking lots to manufacture sterile injectables and personalized gene therapies on site. In this interview, Mark brings his trademark intensity, business savvy, and showcases a genuine desire to let doctors get back to the business of doctoring. Join us for the conversation.
So we are living through tumultuous times in healthcare as we speak. The government is shut down. SNAP benefits for millions of Americans are due to expire, and the healthcare subsidies that Americans depend on for affordable healthcare insurance are lapsing, leading to a massive spike in people’s healthcare insurance premiums. But thankfully there are folks out there who are trying to make things better. And so today I’m so happy to be joined by entrepreneur, investor, Shark Tank host, Dallas Mavericks owner, and now healthcare reformer Mark Cuban. So Mark, welcome to Good Medicine.
Mark Cuban (00:03:30): Thanks for having me on.
Rohan Ramakrishna (00:03:32): So Mark, I wanna start with a little bit of your time before the Mavs, before Broadcast.com, etc., and really walk through the very beginning. Walk me through your first hustle. You know, when did you—how old were you? What did you do, and what did that experience teach you?
Mark Cuban (00:03:48): Nine, 10 years old. I grew up in Pittsburgh, Pennsylvania, middle-class neighborhood, and I would buy packages of baseball cards. And since we were all Pittsburgh Pirates fans, I would repackage them so every, you know, every few packages would have a Pirates player in it, and I could sell ‘em at a premium and make some money and fill my habit by going up and buying other cards, etc., etc. So that was the first time. And then when I was 12 years old is where it really kicked off. I wanted a pair of new basketball shoes. I’ve been a basketball junkie as long as I can remember. My dad had a bunch of his buddies playing poker at the house, and I’m sure they were just lit. And anyways, I walked in there to just say hi and get a donut or whatever.
(00:04:29): And I asked my dad if I can get a new pair of basketball shoes—new Converse or whatever, Puma Bullets [CHECK], whatever the hot shoes were at the time—and he looked at me and he goes, “You see those shoes on your feet? They would look just fine. When you have a job, you can buy whatever you want. Until then, those shoes will do the trick.” Yeah. I’m like, “Dad, I’m 12. How am I gonna get a job?” And one of his buddies at the poker table was like, “I got something for you. I got these boxes of garbage bags that you can go door to door in the neighborhood and sell.” And I was like, “Cool, can I do it, Dad?” And he was like, “Sure.” Yeah. And so that really was the beginning. I mean, you can imagine it—walking up to a neighbor going, “Hi, my name is Mark. Do you use garbage bags?” And that’s just what set me off, you know? And once I learned how to sell, that gave me confidence to do anything.
Rohan Ramakrishna (00:05:15): Well, that’s very cool. So fast forward a bit, you started Broadcast.com. Right? And what was the origin story there? Were you trying to solve a personal problem for yourself in terms of—
Mark Cuban (00:05:23): Yeah. Trying to—so Indiana, up until last year and this year, was a huge basketball school. Now it’s as much a football school as anything. And to listen to our big basketball games in Dallas, Texas, in the, you know, before 1995, we would literally get somebody in Bloomington, Indiana to put a speakerphone next to a radio. We would have a speakerphone down in Dallas and a 12-pack of beer or whatever, and we’d sit there and yuk it up and listen to the games if it wasn’t on television, on national TV. We just had to follow it, you know, in the beginnings of the internet with online services like America Online and CompuServe, etc. So I was like, there’s gotta be a better way. I had sold my first company, MicroSolutions, a few years earlier, and we did systems integration. I wrote software, connected PCs in the local and wide area network. So I had a general feel, and so we started a company—my buddy and I, Todd Wagner, started a company called AudioNet, which the goal was to be able to stream. We called it netcasting or internet broadcasting at the time, but to send audio anywhere over the internet. And that’s how the whole internet streaming industry started.
Rohan Ramakrishna (00:06:29): Hmm. That’s very cool. So, you know, listening through all of this, you know, you clearly follow your passions. Right? And I think that’s advice that often mentors—
Mark Cuban (00:06:39): Actually, I’m not a follow-your-passion type guy at all. Yeah, I’m not a believer in the whole follow your passion. I’m a big believer in follow your effort. You know, where do you put your time? Because my passion was to be a baseball or basketball player. My reality was, you know, it wasn’t going to happen. And so even though I thought I was good at the time, but what I found myself really excited about by that point in time was technology. And I didn’t even take technology in school. I got a job at a software store, and it was basically teach myself everything to learn until I got fired, which is a whole nother story. But in any event, that led me to starting MicroSolutions. But I just realized that I had an aptitude for it. And I’ve always been curious. I always loved to learn. To this minute,
(00:07:26): you know, I’m as curious as anybody you’ll ever meet, to just keep on learning. And that’s always served me well. And so I’ve, you know, when people have always said, “Well, follow your passions”—I’ve never been a big believer in that. Yeah. It’s like, follow the things you like to learn, and the things you like to learn may not coincide with what you’re passionate about. You dream about, yeah, you know, that tennis career, that music career, being a, you know, a hip-hop artist or rockstar, but if you find yourself—like in my case—loving to learn about technology and loving to learn about business, that’s the path you typically will take, because that’s where you follow your efforts.
Rohan Ramakrishna (00:08:02): Yeah. And I—what I was gonna say also is that in addition, you know, people give that advice about following your passions, but so much of it is also where do your set of unique skills and expertise line up, you know, to support— Yeah. And—
Mark Cuban (00:08:13): The other way to find out is to try different things. Yeah, right. Yeah. If you were to ask me when I was 18 years old, you know, would I be in technology? I would’ve laughed at you. You know, I would’ve been like, “No, I just wanna start my own business. I’m not, you know, I’m not into computers,” until I tried it, ‘cause I’d never really done much with it. You know? And so, you know, you’ve gotta go out there and I tell kids today, you know, the job market, AI—there’s a lot of uncertainty. But I tell ‘em, you spent four years paying to go—paying to learn. The minute you graduate, you have the opportunity to get paid to learn whatever that job may be. It doesn’t need to be the perfect job. It doesn’t need to be a career, particularly now. You know, back in the day, used to look at a resume and say, “Oh, you were only there two years, you know, you jump around the jobs.”
(00:08:54): Now people expect that, and you know, you’re like an NBA free agent every season. And so by going to different jobs, you’re getting paid to learn, and you get to find out more about yourself and how business works, how companies work, how, you know, what it’s like to be responsible. And so I think you don’t, you know, when you’re young—and particularly—you don’t have to have it all figured out. You want to go out and experience all these different things. And now with AI, oh my god, you know, every AI model out, you know, frontier model out there is like having every med school library, having every business school library, every consultant, etc., etc., available to you at your fingertips. So a 12-year-old, 16-year-old, 22-year-old, 88-year-old—you know, if you’re willing to say to ChatGPT, Perplexity, you know, Gemini, any of them,
(00:09:42): “Hey, I wanna learn Polish because I have this business deal,” or “Help me put together a business plan for this idea”—you know, back in the day, we would’ve sat on the internet for 12 hours, going through all these links, trying to accumulate it all together, and we still might not get it right. And now, you know, an AI model might not give you a perfect answer, but nobody—no professor, nobody—ever can give you a perfect answer, but it’ll save you a lot of time and save you, you know, and give you a head start and an opportunity to democratize your entrance into being an entrepreneur or whatever industry. Right?
Rohan Ramakrishna (00:10:16): Well, with that, I wanted to get into healthcare and so— Good. You know? So tell me, what, you know, it’s not obvious that this is a place you would land at this sort of stage of your career. So I’m curious, what got you into healthcare?
Mark Cuban (00:10:29): Well, I mean, I’m just getting started in my career. So I mean, I figured I’d try new things. And so—well, going back to like 2017, when the Republicans started talking about overturning the ACA, being in Texas, I got a lot of questions. You know, “What would you do? What would you do?” And so I started digging into it some and looked at different payment models and the like. And then 2019, maybe 2020, I got a cold email from a Dr. Alex Oshmyansky, who was a radiologist and probably the smartest person I know. You know, one of these math scholars who, you know, takes on math problems just for fun. Know, and he goes to conferences to learn math, you know, how to solve this—the, I don’t even know. So anyways, he sends me a cold email and he says, “I want to create a compounding pharmacy that makes drugs that are in short supply, in particular sterile injectables.”
(00:11:19): I’m like, “That’s interesting. What the hell is all that?” So he starts explaining that to me. And at the same time, this is when the Pharma Bro was going to jail. And I was like, how can this one dude jack up the price of this generic drug Daraprim 7,500% or whatever it was and get away with it? And he started explaining things. So that’s when I really started digging in and researching everything. And it became obvious that the entire healthcare industry, starting with pharmacy, is completely opaque. And it was opaque for a reason. I might not have understood what all the drugs could do and what they all meant, but I understood how business works. And I understood: when you know, the more opacity there is, the less knowledge, the more imbalanced the negotiation is. And so I saw an opportunity, and we created CostPlusDrugs.com with a simple goal, right?
(00:12:06): To be completely transparent. And how did we do that? We made it so that when you go to CostPlusDrugs.com, then—like now—you put in the name of a medication, if it’s one of the thousands we carry. We don’t have ‘em all, but we have a lot. It comes up and it shows you our actual cost. Then it shows you our markup, which is 15%. Then it shows you—because if it’s mail order, it’s $5 for a pharmacist to look at it, $5 for shipping. And that’s our total cost. And because we did it that way and we had a fair markup, we were less expensive, particularly on more expensive drugs, than anybody else. And that led to us going from 111 drugs on January 19th, 2022, when we launched, to thousands more now. And as our volumes have gone up, you know, our prices have gone down, and when our costs go down, we pass them along. And that’s led to us making millions of people happy.
Rohan Ramakrishna (00:12:57): That’s awesome. Where did the 15% come from, out of curiosity? Was there a reason you—
Mark Cuban (00:13:03): Yeah. Just out of thin air, ‘cause I thought it was fair. Yeah. You know, and since then—I didn’t know it at the time, but since then I saw a—listened to a podcast and I think it was a doctor that said something that really resonated with me. He said trust can be defined as a formula: trust equals transparency as the numerator divided by self-interest as the denominator. So the higher, the more transparent you are, the higher the numerator. And the less self-interest you have, the lower the denominator. Right? And so by having a 15% markup, people realized that our self-interest wasn’t, you know, overwhelming. We weren’t trying to sell at market price. We were selling at a fair price that is going to be less than market. And that’s really worked out for us because, as I would tell, you know, we hired people who came from the healthcare industry and the pharmacy business, and they initially were trying to do things the way it was done in the industry. Yeah. And I just had to remove all of those instincts from them and remind them that we don’t really sell drugs. That’s not our product. Our product is trust. Because in the healthcare industry, across the board, including pharmacy, people trust their doctors, people trust their pharmacists, but they trust nothing about the economics or finances of healthcare. And since that was our differentiator, we had to make sure that people trusted us. And that was our—that truly was our product.
Rohan Ramakrishna (00:14:23): Using that formula, there’s certain organizations that could have trust scores near infinity, right? Potentially. But where would you—how would you rank Cost Plus on that formula? How would you rank hospitals? Doctors, payers, providers, you know? Yeah.
Mark Cuban (00:14:36): That’s a broad question, right? Obviously, you know, we’re completely transparent. I mean, we don’t—we’re not allowed to show some of the contracts we have with some companies. So let’s—I guess we’re not completely transparent, and we’ve tried to get our manufacturers to do that, but because of PBMs, they’re afraid to do it. But beyond that, I think we’re very transparent. But the nature of the economics of the healthcare industry, starting on the medical side, which includes the pharmacy benefits, is so convoluted, it creates problems. And it creates problems for doctors. You guys are underpaid as a result. You guys are overworked as a result. And I’ll go through it. It starts with an insurance plan. If you think about what happens with an insurance plan from the big—the BUCAs, the big carriers, right? That you guys are way too familiar with.
(00:15:22): Doctors shouldn’t have to understand the insurance industry, but yet you do. But it starts with, there’s a trade-off between how high a premium is and how low the deductible is, right? It’s an inverse relationship. And then the people choosing a plan, whether it’s your employer, a state employer, or ACA—now going through open enrollment, you know, the people who have the biggest financial problems typically tend to get lower premiums and higher deductibles and hope they don’t get sick. Well, that’s the first fundamental problem of the healthcare industry, because there’s no credit check. Right? I’m not saying there should be, but it, you know, in a country where 40% of people can’t afford $400 if there’s an emergency, well, by definition, if you have an ACA plan, which is about to go up to a $5,000 deductible, and you can’t afford $400 and you’re not on Medicaid, you’re stuck if something happens. Yeah.
Rohan Ramakrishna (00:16:14): Basically what you’re—what I think you’re also pointing out is that so many of our citizens in this country are effectively uninsured, even if they do have insurance. Oh yeah. For—
Mark Cuban (00:16:24): Sure, right? Yeah. Healthcare—health insurance is not a proxy for healthcare, right? Not even close. Right? And that starts to create the problem. Anybody, you know, the average corporate deductible is $1,500 to $2,000 range, right? The ACA is higher than $4,500, and the max out-of-pockets are like $5,000 to $10,000 for corporate and now going up to $20,000-plus for a family of five for an ACA plan. And so that is a real problem. Most people cannot afford. But that leads to the overall construction of the economics in healthcare problem, because who takes on the credit risk if a patient can’t pay their deductible? Well, we— Yeah, yeah. Hospitals do. Right? So now we’ve turned hospitals into subprime lenders. For—we don’t even know the total amount, but we know there, you know, hundreds of billions of dollars in unpaid medical debt.
(00:17:18): Right? And so that’s as big—almost as big—as the subprime lending crisis in real estate in the Great Recession. Right? So now you’ve got these hospitals who have to—and providers, practices—that have to take on this debt, right, from patients. Because they’re not gonna just say, “You’re shit outta luck,” right? And they want them to be able to reach their deductible, so then they can hopefully get paid by the insurance company. So they’ll loan them money, or they’ll use a third party to loan them money. Hmm. And that creates obviously a challenge, because if they try to collect it, they’re the bad guys. But then if they don’t, they lose the money, right? And so depending on the hospital and where you’re located, you could see 50% write-offs. So put that in one bucket of providers having to subsidize patients. Right?
(00:18:06): Then you look at the contracts that they sign with the BUCAs, right? So you wanna be part of a network. You’re gonna—first, with that contract, there’s a ton of overhead associated with it, right? You’ve gotta have the people to process it. You’ve gotta be able to look for the copay, the co-insurance, all those things. That’s expensive. And they come up with new plans every year, and everybody gets a new card and chooses a new plan every year, which makes it even more expensive. But to make matters worse, first of all, those big BUCAs negotiate higher prices than any Joe Schmo walking in off the street with a credit card. Right? Because the hospitals know there’s all kinds of associated costs with it. And so, but not only is it a higher negotiated rate, but they don’t even pay the full amount. So if they negotiate a rate like a $25,000 rate for a hip replacement, they might say, “We’ll pay you $20,000.”
(00:18:57): Right? And now the hospital’s out—talking to hospital CFOs—they’re out another 3% to 5%. So they’re subprime lending, writing off debt. They’re out another 3% to 5%. And then there’s your favorite: prior authorizations, where the insurance company has a 97-year-old veterinarian trying to make a determination on oncology. Right? And their goal really isn’t to deny coverage. Most of the time, their goal is just to delay coverage, right? Because—or the procedure—because they get the time value of money and the hospital loses that time value of money. And on top of that, you’ve probably spent way too many hours talking to that veterinarian who runs that committee. Right? How many hours a week do you spend dealing with pre-auth committee discussions?
Rohan Ramakrishna (00:19:43): Well, we have to hire teams of people. It’s impossible for even one person to do it, right? I’m a surgeon.
Mark Cuban (00:19:48): And so now your costs go up even more. Yeah. So when you go—so now we go back to the original question. Right? Why is it that we are where we are, and who is trustworthy in the entire economic side of all this? Well, the insurance companies? No. The PBMs? No. Now, what about the hospitals? Maybe? Right? Because now the hospitals are at a disadvantage because they have all these expenses associated with doing what they pretty much have to do to get patient flow. And so what do they do to compensate? They create dumb-ass shit like facilities fees. Right? Why? Facilities fees are relatively new. You know, over the last five years—I don’t know the exact date, but you didn’t have ‘em 10 years ago, but now everybody does—as a way to kind of balance. Right? And then on top of that, you’ve got all the overhead we talked about and all the people. That jacks up cost even further.
(00:20:45): And because of all those costs associated with commercial plans and ACA plans, those same hospitals can’t afford—or at least pretend that they can’t afford—to take on Medicare and Medicaid patients because their book of business—if you took out all that overhead associated with dealing with the BUCAs, not only could you charge less, but you would be able to afford dealing with Medicare and Medicaid. And hospitals that are focused on that book of business—and that’s the term I learned from hospitals, book of business. Right? And product mix, right? Yeah. They’d be able—they’d make money at Medicare and Medicaid. Like Duke Health makes a ton of money. They make 4% because they’re focused on that. And Medicare and Medicaid doesn’t have the paperwork obligations that all these commercial insurers have. And so when you pull all these things together, that’s how we get a messed-up healthcare system on the economic side. That’s why they dig in and they push you guys to have to do nine operations a day to try to hit your RVU numbers.
(00:21:48): Right? I want my doctors rested. I want you guys back to playing golf on Wednesdays, right? No appointment on Wednesdays—go play golf. I don’t want you having in the back of your mind thinking about the complicated tumor extraction that you have to do that’s three operations down, because you think, “This is—you’ve done this enough times and you’ve got enough help here.” Right? Not that any doctor’s not gonna stay completely focused, but everybody’s human, right? Yeah. And that just puts so much more pressure on you guys that shouldn’t be there. So you’re underpaid and overworked and dealing with all kinds of mishigas and nonsense that shouldn’t be there simply because the starting point is we have deductibles that people can’t afford.
Rohan Ramakrishna (00:22:28): Yeah, absolutely. And by the way, you used one of my favorite words, which is mishigas. So, mishigas.
Mark Cuban (00:22:33): Yeah. Hey—
Rohan Ramakrishna (00:22:36): No, you’ve been actually tackling this yourself with direct contracting. Can you talk about—
Mark Cuban (00:22:41): Yeah. So what’s the solution—
Rohan Ramakrishna (00:22:43): Is it truly a business decision? You wanna just explain—
Mark Cuban (00:22:45): A hundred percent business decision? Yeah. So the question becomes, knowing all of this, I try to put myself in the shoes of the hospital—any doctor provider, right? What’s best for them? And given what I just told you—not having to deal with all the mishigas and the contractual and the administration and overhead and all that, and not having to take on the payment risk of the deductible—we created a company called Cost Plus Wellness that isn’t a company, it’s more of a service. That’s a free service where, for my employees and our members, right, we’re going to hospital systems, physicians, practices, clinics. And we’re saying, “Look, I give ‘em the discussion that you and I just had,” and they’re on the other side of it, right? So they understand it personally. And I said, “You don’t—there won’t be any pre-authorizations. By the time a patient gets to you, we’ve already approved it and gone through everything.
(00:23:37): Whatever we negotiate is what we pay, and we pay you right away—cash, straight-up money. And so we want you to treat us like a cash-pay customer. And for the things that you don’t list with a cash-pay price, we want it to be a reference price to Medicare. So it might be 120% of Medicare. If it’s a service like an MRI, it might be 80% of Medicare. But if it’s something more complicated where it’s inpatient—true, you know, tumor operation and you don’t know, there’s not a simple exact price—then, you know, we’ll negotiate. But we’re not exclusive to you. So if there’s three hospital systems in a market, you know, and we think the doctor’s good and the patient approves of the doctor, then we’ll look for the least expensive, high-quality option. But by doing that, we think we can see our healthcare costs on the medical side go down and see our pharmacy bills go down.
(00:24:29): And for our—my direct employees for Mark Cuban Companies—we have no out-of-pocket. If you work with one of our Cost Plus Wellness doctors—and there’s 9,000 of ‘em and growing now—and if you buy using Cost Plus Drugs, there’s no out-of-pocket for you as well or your family, because we’re saving, and we’re still seeing our savings increase by going down this path. Now the challenge is getting everybody to work with us, because the key to what we’re doing in all of this with our direct contracting is, on CostPlusWellness.com, by the end of the year, we’re gonna publish all of our contracts so that any employer can come in and say, “Wow, I can get a better price,” or “Mark, your price is too high. We’ll beat your price, and here’s the contract—will you publish it?” And then it just becomes a more efficient market so that everybody hopefully is happy and the cost of care goes down for everybody.
Rohan Ramakrishna (00:25:24): So as you’ve kind of done this work with direct contracting with your own businesses and your kind of knowledge and connections now with the healthcare industry, how would you advise hospitals to structure their contracts? What are they doing that they should—what aren’t they doing they should be doing?
Mark Cuban (00:25:38): So that’s a great question because it really depends on your market position in your DMA, right? There’s some markets where one hospital system just dominates, and they tend to just do whatever they want and try to dictate to the insurance companies, you know, fees and rates and everything. And they’re not—they haven’t been as open to us because they don’t wanna see their contracts published. Not because they don’t wanna do direct contract, ‘cause direct contract’s not new, right? It’s been around for a long time. But they don’t wanna see it published. So we’ll go work with somebody who’s not market dominant. And anybody who’s not market dominant within a DMA loves us, right? Because we’re a new source of patients. And any physicians love us, you know, MRI, X-ray, any service operator, right? Loves us. Clinics love us, because, you know, their hope is by having that contract published, then they’ll get a new flow of patients. Because the only reason they give lip service to the BUCAs is because it’s a flow of patients, you know. They control, you know, across all of them, there’s 300 million insureds, right? That they make—control. That’s—Amazon has 162 million customers. So that’s almost twice as many, you know, that go through the BUCAs. And so the opportunity to get away from that and be leaner and meaner and not so much mishigas—to use our favorite word—no, right, is attractive to them. And so we’ve gotten really positive responses. And we’ve been out negotiating contracts for about a year. Like I said, we’re past 9,000 providers, and that number just continues to grow, and we haven’t even published anything yet.
Rohan Ramakrishna (00:27:16): Got it. And if you’re an upstart payer like you are now, did you go with them with a hundred percent Medicare? Like, how did you structure a contract?
Mark Cuban (00:27:23): We negotiated, right? Because we said, “Here’s your cash price. We get to see it.” Yeah. In most cases. And why would we pay more than your cash price? Right? Because I can just give, give, you know, a credit card. But it’s the more complicated things you have to negotiate, right? What if something goes wrong? What if there’s an extended stay, you know, in the hospital, da da da da da—that’s where the complications come in. And that’s where there’s a negotiation. But like, you already see insurers, after X number of days, trying to get you to push them to some external, you know, site to get ‘em out of the hospital where it’s cheaper. You know, we’ll have that opportunity as well. But I’m hoping that because we negotiated a cash price and we pay right up front, they’ll keep those costs lower and we won’t have to track people around.
Rohan Ramakrishna (00:28:06): That’s crazy. I mean, I dunno if you saw this—there was a story in The Washington Post about this doctor who had a fracture, ankle fracture, after a car accident, was taken to a hospital and she had urgent surgery to set the fracture, and she got there in the evening, stayed overnight, and the insurance denied her hospital stay and gave her this massive bill because apparently she should have been sent home the same day, alone, on narcotics, post-surgery.
Mark Cuban (00:28:29): It was like a $64,000 bill for— Yeah. Yeah. Something ridiculous. That’s what, you know, why they do that—because they can. Yeah. Because the hospitals expect to negotiate after the fact. And what—and I, for—I didn’t read the whole article. I just saw the summary of it, and I think she negotiated it down after the fact. Right? Yeah. Because that’s what—
Rohan Ramakrishna (00:28:47): All this time. Right. And effort and like, whatever. Right.
Mark Cuban (00:28:50): Right. But hospitals expect to do it, which is crazy in and of itself. Right? You should, you know, because that’s an arbitrage on patient knowledge. Hospitals should not arbitrage patient awareness of their ability to negotiate. There’s such an information asymmetry that that’s not fair, right? Your trust score is gonna go down. Yeah. When you do that, you know, and hospitals game the system with 340B, the site neutrality—or lack thereof—facilities fees. So they’re not—they’re complicit in this at some level. But the starting point is that insurance plan? Yeah. That triggers everything. And so to change all this, that’s where we have to start.
Rohan Ramakrishna (00:29:31): Yeah. I wanna get back to Cost Plus for a second before we circle to see PBMs, which I know is one of your favorite topics. One thing I found fascinating is, as part of the Cost Plus journey, you got into manufacturing of drugs. Right? And can you talk me through the complexity of setting up your own onshore U.S. manufacturing? So—
Mark Cuban (00:29:50): Good news is, that’s where Alex shines. Right? That’s his baby. I deal with the front-looking stuff, facing stuff. Yeah. And the strategic stuff. But Alex, you know, is an AI, you know? Yeah. Savant in a lot of respects. So, you know, we used robotics, and it took a couple years and a lot of money, but it’s a robotics-driven factory that’s geared towards sterile injectables. And we’ve learned a lot in the year and a half since we’ve launched. So hospitals, as you know—you know, sterile water goes on short supply, you know, Pitocin goes on short supply. Yes. There’s pediatric cancer drugs that go on short supply. And so we can manufacture all those things and sell it for less than, you know, what it costs—what it costs when it doesn’t go on short supply. Hmm. And so that’s been a good business for us. But what it’s really taught us is how we can modularize all of that so that, you know, traditionally, when you’re looking to grow a factory that manufactures injectables or small molecule, whatever it may be, you just make a bigger factory to get your scale.
(00:30:47): Yeah. In our particular case, what Alex has been able to do is modularize it into pods. So we’ve got these huge trailers that we’re using to expand our capacity that not only can continue to do injectables if we reach capacity in the manufacturing plant, but we can do small molecules. But we can also do biologics—not quite yet today, but very soon. And so for biosimilars, we’ll be able to manufacture those. And by the way, we’re coming out with biosimilars. We already have ‘em for Humira, and we’ll have one for Stelara that will ship next week. That’s gonna be—like, I can’t give you the price till next week, but it’s gonna be a lot lower than you expect. Let’s put it that way. That’s—it’ll be market-changing. Yeah. But to go back to your point, so we’re creating these pods, you know, they’ll be $15, $20 million depending on the configuration. But the ultimate application will be in a research hospital that does N-of-1 biologics, cell gene therapies, those types of things where they’re doing research trying to save some child’s life or person’s life.
(00:31:55): And right now, when you think you have a solution, you have to send it to a certain type of facility that might take weeks and cost at least half a million dollars. While by having this pod out in the parking lot, you’ll be able to do it right there, and it’ll cost you $50,000 to $100,000 and take days, so that you can reiterate. You can say, “Okay, we’re gonna try this on your baby. You know? Here’s the what we think is the right cell and gene response.” I’m not using the right terminology, obviously. Yeah. And if it doesn’t work, then we’re gonna try this—we’re gonna iterate and try a different approach. Yeah. And just—that’s just life-changing, you know? And I think that’s gonna be our biggest impact, because any hospital can have it, you can put it anywhere. And then you can also have a pod that can do the injectables, and another one that does small molecules.
(00:32:46): And because the cost for the machines that do all that is falling, by putting it in a pod, a hospital can put this in their parking lot or in a warehouse somewhere and manufacture their own generics, manufacture their own licensed products for less than they buy them today. And so that will be a growing part of our business. And of course, if there’s a natural disaster—a tornado, hurricane, flood, whatever—and you can’t get everything there, you can just, you know, if you can get that in there, even if you have to fly it in and drop it with a helicopter, well, you’ll be able to manufacture that way as well. So that’s another part of our business. And then the extension of the manufacturing is what we—is Business.CostPlusDrugs.com, which is our Cost Plus Marketplace. And so we’re literally acting as a virtual wholesaler and selling to hospitals.
(00:33:32): So please have your administrators give us a call. Yeah. Like we’ll go through your claims list, and we’re saving—like Penn Medicine, they said that we could save them $4 to $5 million a year. CHS, like $1.5 million a year. All because, as much as the pricing for patients for drugs is distorted and opaque, it’s just as bad for hospitals and clinics. And so we’re doing a cost-plus markup there and saving hospitals a whole lot of money. And that, you know, and we’re also selling our biosimilars there, and that business is growing rapidly as well.
Rohan Ramakrishna (00:34:04): Well, congratulations on that success and doing this all like in the United States. I’m curious, though, how vulnerable—I mean, you—we saw how vulnerable we are as a country to external supply chains during COVID. And I’m curious, even for your business, how dependent are you for foreign materials, for raw materials, for— Right. You know, running the business? I’m curious.
Mark Cuban (00:34:25): So there’s multiple parts, as you know. There’s the key starting materials, which might be pig guts, right, for whatever drug. And then there’s the API—advanced pharmaceutical ingredients—which is extracted or created from it. We’re still vulnerable on the KSMs to a certain point. And a lot of that has to do with environmental concerns, because, you know, in certain parts of India and China, they don’t care. Hmm. Right. We care here. So some of those things are gonna be hard to bring over. But if we’re able to invent—and, you know, you have discussions with people who say they can protect the environment and allow us to create the KSMs, etc.—as we solve those problems, we’ll be able to bring everything here. Because the APIs to make the drugs, you can put a year’s worth in a tub for certain drugs, right? So it’s not like it takes warehouses full. It’s actually a lot smaller than people would think. And so the APIs aren’t really a challenge. It’s more the key starting materials and a lot of the minerals and all kinds of stuff I don’t fully understand—that or haven’t learned yet, I should say—that are risks still.
Rohan Ramakrishna (00:35:33): Yeah. So I’m curious, like, how would you grade the success of Cost Plus today? And I would—I would probably, as an external viewer, see very successful, because it seems as though lots—some other competitors are getting into this game, right? Like Amazon, Costco, etc. And so how does Cost—how’s Cost Plus doing? How does it compare, when you look at your pricing versus people who are trying to do direct-to-consumer sales? How does the prices compare?
Mark Cuban (00:35:59): So our business keeps on going up to the right, so that’s my gauge. And I keep on getting emails, you know, almost every day saying, you know, “We thought we weren’t gonna be able to afford a medication at [insert pharmacy here]. They’re gonna charge us $900, and your price was $30.” We get those emails all the time. So for specialty generics and biosimilars, we’re always cheaper. Yeah. Right. Always. For metformin and the things that, you know, Walmart might sell for $4 and Amazon for $5, we’re probably not cheaper. But if you’re getting your cancer medication or MS medication from us, it’s just easy to add on, and our price might be $8 and their price might be $4, you know? Mm. So there’s not a huge delta, but we’re not always gonna be the absolute cheapest for low-cost drugs. But sometimes, you know, even they’re like, you know, where the big PBMs get involved—like at TRICARE. Before I testified at Senate hearings on aging last week,
(00:36:51): you know, they asked me to look at the copays for TRICARE, and there—like, our drugs that cost under $8 plus $5 shipping—they just increased their copays to $16 if you don’t, you know, get it on base. And that’s before they even charge the government for the actual medication. And so there are a lot of places where we could still save, even on lower-cost drugs, people a lot of money. Medicare Advantage, Medicare Part D—the co-insurance, the copay—sometimes are surprisingly high. And that’s a big part of our business. And, you know, because we’ll save people money there. And on Amazon, you gotta be a member of Prime, or you have to pay the $5 a month to get the repetitive pricing. Costco does a good job, but they don’t carry everything, and they don’t have all the specialty generics. Same with Walmart—they just carry their hundred drugs that are inexpensive. Walgreens, you know, typically prices to market. So, you know, we tend to be cheaper for almost everything but the cheapest, cheapest drugs at Walmart.
Rohan Ramakrishna (00:37:52): Do you know, some players like CVS and Express Scripts have launched their own cost-plus models. They’ve even borrowed the phrase. Right? Do you see that as a validation of your approach, or do you worry that they’re co-opting—because—
Mark Cuban (00:38:03): They’re not. Like—
Rohan Ramakrishna (00:38:04): Yeah.
Mark Cuban (00:38:05): Without—
Rohan Ramakrishna (00:38:06): The transparency. Exactly.
Mark Cuban (00:38:07): Yeah. That’s a marketing play and PR play. Okay. Yeah, right. So I’ll give you two examples. One, we’re still the only pharmacy that publishes a complete price list, let alone with our cost, right? You can’t just go to Amazon or whoever—any of the big PBMs—and say, “Can I get your price list, please? So I know your net prices so we can compare.” At the same test—Senate hearing where I testified, the guy who was in charge of CalPERS, Dr. Moulds [CHECK], said they used our price list to negotiate with CVS so that they can get lower prices, to make sure that they were getting legit pricing. And we hear that all the time. So that’s one thing to keep in mind. They’ll talk a good game, but they’re not transparent. So nobody really knows until, you know, even after you sign the contract.
(00:38:52): And the second thing is, I was talking to a company—9,000 lives covered, so they’re not small. $9 billion in revenue in an industrial company. And they asked me, “How can they save money?” ‘Cause costs are going up too fast, etc. And I said, “Well, here’s the test, and I suggest this to any employer or anybody out there: go call your PBM and say, ‘Hey, we’d like to add Cost Plus Drugs to our pharmacy network. We’ll only use them when they’re the cheapest.’” That’s fair, right? Because Cost Plus doesn’t have any exclusive with anybody. We don’t, we don’t say, “In order to use us, you gotta be exclusive to us,” like they might do with their specialty drugs. We just say, “If we’re cheaper, use us. If not, it’s your choice.” This company asked their PBM to add us, and we had a followup call. I was waiting to hear the answer.
(00:39:38): She came back, and she said, “Oh yeah, it’s great. Yeah. They said, you know, yeah, they can use you if you’re cheaper.” I’m like, “They said they’re already using us if we’re cheaper with their cost-plus-equivalent plan.” And she said, “Yeah, they said they use you.” I’m like, “No, we don’t have a contract with them. They just lied their ass off to try to make it seem that their cost-plus-equivalent plan was the same.” “Now go back and ask them for all your claims with the net price for the medication associated with it.” And then she came back to me and said, “They won’t give it to me.” I’m like, “Well, they probably offered to give you 300 claims and to use one of their companies to audit right what they’re doing.” And she said, “Yeah.” I’m like, “Well, getting 300 claims and statistically extrapolating is useless, right?
(00:40:24): Using one of their companies to audit themselves is criminal, right?” So I gave them the name of somebody who will do an actual audit. And, you know, I go speak to different groups—for pharmacy benefits managers and healthcare benefits managers. And I always ask one of the same questions, “Is how many of you have audited your PBMs?” and a bunch raise their hand. “How many of you have ever been overpaid?” No one’s ever raised their hand. Yeah. “How many of you have been underpaid?” 10%—hands stay up. 20%—hands stay up. 30%—hands stay up, right? So the PBMs know exactly what they’re doing. You know, they’re getting away, a little bit, from the rebate-based way of scraping money from you by using these things called rebate GPOs. Do you know what they are? No. Tell me. Okay.
(00:41:09): So you would think a big PBM, right, that does tens of billions of dollars in business, can directly negotiate their rebates, which really is just auction off access to their formularies. Right? That’s effectively what they’re saying. They don’t ever negotiate actual price. They negotiate access to a formulary, and that’s what they get paid in rebates. Hmm. You would think they could just directly negotiate that with a manufacturer. They used to. But then they created these intermediary companies, subsidiary companies called rebate GPOs. Two of the three have them overseas, so they’re not under the same regulatory requirements. And those rebate GPOs do the negotiations for the manu—with the manufacturers for the rebates on each of the brand drugs. Well, the game that’s being played there is, on—pick a drug—they might negotiate a 60% rebate at the rebate GPO. Then they’ll charge a 10% or 20% fee to the PBM because they negotiated this for them.
(00:42:09): Now the PBM can say to a corporate account or state or whoever, “Hey, we’re only getting 50% or 40% rebate on this, but we’re passing all of that through,” not disclosing that the subsidiary’s keeping 10% or 20% for themselves. Right? And then on top of that, they’re charging all these ancillary fees. If you happen to be a person that’s negotiating these contracts, whatever contract they send you, they’re lying. Right? But put it into ChatGPT or Perplexity and just say, “What am I missing? What are the things that I might be charged?” You’ll be astounded at how correct it is at finding these things. ‘Cause what they’ll do is they’ll say something to the effect of, “From time to time, we may charge you a fee for uncertain costs that we accrue,” which just gives them carte blanche to charge whatever they want. Right. Right, right. That’s part one. And part two, they’re using biosimilars now to pick up a lot of margin. So they’ll have a third-party company manufacturer a biosimilar under a brand name that the PBM creates, and they’ll have one or two versions of that. Typically, one’s a high-rebate version and one’s a lower-cost version, but in both cases, they’re more expensive than ours, and they keep a huge margin on it. So those are the games that the PBMs are playing now to be aware of. Yeah.
Rohan Ramakrishna (00:43:29): You know, circling back again to your—to Cost Plus for a second. You know, one of the—I wouldn’t say it’s a critique, but, you know, the—
Mark Cuban (00:43:36): You can critique. Yes, we’re not perfect. There’s lots of things to critique. Just about, you—
Rohan Ramakrishna (00:43:40): Know, a lot—a lot—most of the healthcare spending or Medicare spending, top 10 drugs are all branded drugs, right? Oh,
Mark Cuban (00:43:46): Yeah. Why don’t we have brands? Right? Yeah. Why don’t we have— I’m gonna tell you exactly why we don’t have brands. I was interviewing the CEO of a big branded company at an event. And I said to him, “You know, nod your head twice if the reason why you won’t sell your brand medications to Cost Plus is because the PBMs won’t let you sell to us.” And he goes, “I don’t know what you’re talking about, Mark. That never happens,” right? You know, so to that effect. And the problem is, the PBMs know what we’ve done to specialty generics. We’ve destroyed the margins in specialty generics. You know, they still try to get away with it because of the information asymmetry with patients against their deductible. In particular, they’ll try to charge the $900 for a $30 drug and often get away with it, particularly during the deductible phase when the patient has to pay the full list price.
(00:44:37): But if we got brands and we only marked it up 15%—so let’s just use Eliquis as an example, and I don’t know the exact number, so I’m kind of guessing—Eliquis supposedly has a 60% rebate, plus fees. And so $600 list price to make it an easy number. And 60% rebates and fees means the net to the manufacturer is 40—is $240, right? 40% of $600. Well, now there’s $360 in fees and mishigas money right in there. And so if they sell it to us, it’s not at $240. Let’s just say at $260. Right? And we mark it up at 15%. Well, that’s $299 that we’d sell to patients for. Well, what is that impact? Well, think about what I said about CalPERS using us as a price reference. So now they’re gonna see, “Well, Cost Plus sells this drug to anybody for $299.
(00:45:33): Why am I paying $600?” Every patient is going to look at it and say, “I’m still in my deductible phase. I’m an ACA, you know, silver plan in 2026—silver plan with a $5,000 deductible—and I’m having to pay $600 a month. So, you know, until I get to—eight months before I hit my deductible—when I could go to Cost Plus and $300 times 12 is only $3,600, which is way below my deductible.” And so—and I’m saving money. That is the last thing the PBMs want, because whether it’s the ACA or a commercial plan, the way the economics work is, you know, like, well, let’s just look at your, you know—let’s just say you needed Eliquis and your plan, and you have a $2,000 deductible. You’re spending $600 a month until you reach that deductible. Of that $600, $240 will go to the manufacturer, right? With fees and rebates, that’s what they net. And let’s say $300 to make the numbers easy will go to the pharmacy that dispensed it, right? The other $300 that goes to the PBM. Hmm.
(00:46:46): Crazy. I mean, the PBM—so literally, the flow of money: the manufacturer sells to a wholesaler for $600. The wholesaler gets a prompt-pay discount of 5%. So now they’ve made $30. And they—also, well, you get a prompt-pay discount—2% plus 3% for digital services. So a total of 5%. So the wholesaler only makes $30 on a $600 drug. But now the manufacturer—now has $570 in their pocket. The pharmacist then buys that same drug for list price minus 30—minus 5%, right? So they’ve paid $570. So now the wholesaler has got $570 for that claim that they then sent to the PBM. The PBM then asks for a rebate from the manufacturer—out of the $570 they have—of $360. Right? And then they pay some amount less than what the pharmacy paid to the pharmacist. So the manu—so the PBM has made $360,
(00:47:50): plus what they short the pharmacy. Let’s just say $400 for shits and giggles. Right? And so the PBM is accruing all the margin dollars in this example. Now, an exact example is gonna be a little bit different because we don’t—there’s no transparency there. We don’t know all the exact numbers. But this is the best estimates that I’ve been told. And so the PBMs accrue all that. How do you change it? You work on a net-cost basis. If the net revenue to a manufacturer is $240, right? Well, they can then charge—if they charge the wholesaler $250, they make $10 more. The wholesaler then works off a $250 base instead of $600. And so if they make their $30, their return on capital is less. And then when they sell it to the pharmacist at $275, the pharmacist is out of less cash, right? The wholesaler’s made more money than they did before. And now the pharmacy is at less risk of being under-reimbursed, because there’s no rebate money going to the PBM. The PBM only—because they’re not getting any rebate money—maybe they under-reimbursed the pharmacy some to try to get some extra money, but there’s no money there for them to make.
Rohan Ramakrishna (00:49:03): Mm. So I’m curious: if, like, let’s say PBMs went away tomorrow— Uh-huh. —would the manufacturers—Pfizer, Merck, etc.—would they be, would prices immediately come down?
Mark Cuban (00:49:14): Yes. Particularly for patients. Mm. Because all that money is going to the PBMs during the deductible phase. And I don’t know exactly how much in total that is, but it’s a lot. Right. And that means more patients would get their medication. More patients would adhere better, because while you’re in that deductible phase, you’re—it’s scary. Right? Right. And it’d be easier on the insurance companies, actually. Because, you know, they—well, maybe not. I won’t go in that direction. So, you know, because once you hit your deductible, you tend to spend more to try to get your money’s worth. Yeah. But they don’t care, because they own the PBMs, right? So they don’t wanna lose that revenue. And that’s also how they game the ACA medical loss ratios. But, you know, the other way to extract the PBMs and their leverage is to say that you have to separate formularies from PBMs,
(00:50:10): because that’s all their leverage. That’s 270 million people that they can auction off to the manufacturers for rebates. If they didn’t have control of those 270 million people, the manufacturers could say, “Screw you. We’re working out deals with the wholesalers”—who may not be all that above board, but at least we have a direct relationship and we can control the pricing—and that all of a sudden pushes things down. I mean, just for patients, think, you know, for your patients that need medications, you know, up until they hit your deductible, that price could be cut in half, you know? And that could save patients tens of billions of dollars a year. If you got rid of PBMs, the PBMs would tell you they negotiate lower prices from manufacturers. But on brands, they don’t negotiate prices at all. They just negotiate rebates to get access to their formularies. And as we saw with, you know, the GLP-1s, where one big PBM kicked off one of the GLP-1 manufacturers, it’s purely an auction. Whoever gives them the most money—that’s who gets the spot.
Rohan Ramakrishna (00:51:14): Yeah. What’s your feeling at Cost Plus around GLP-1s, given the expense?
Mark Cuban (00:51:20): I think you’re starting to see the GLP-1 manufacturers go direct to consumers, right? And that’s lowered the price, because the cost to an employer is typically $1,300 gross. Then they get back a $600 rebate, which takes them down to $700, which is still more than just paying cash. You know, giving your employee a credit card and saying, “Go to Lilly Direct or Novo Nordisk Direct and just buy it for cash.” And the point of all that is, the increased cost is introduced because of the PBMs. Because the PBMs need to get their vig. And if you take out the PBMs, which is the goal of these direct sales for GLP-1s, then the prices are going down. And now, as new GLP-1s become available, you know, oral solids as opposed to injectables, prices will go down further. In 2026, one of them becomes generic in Canada.
(00:52:18): And so you’ll see people, you know, go visit Toronto and, you know, visit a telehealth doctor and get a prescription there. So I think prices will come down, but they only come down where the PBMs are in the mix. You know, when you hear all this stuff about MFNs and most-favored nations, the difference between us and the 33 countries they compare our prices to—we’re the only country that has PBMs. For generic pricing, Cost Plus Drugs pricing where those other countries, you know, have copays or offer them for sale—we’re cheaper. We have people from Canada, the UK, Germany, other countries where they have to buy a drug—we’re always, with—it’s a generic—we’re always cheaper.
Rohan Ramakrishna (00:52:58): Hmm. Interesting. So getting into PBMs more specifically, what should we be doing with PBMs? Like, stop using—
Mark Cuban (00:53:04): What?
Rohan Ramakrishna (00:53:04): Stop using? You—should you—
Mark Cuban (00:53:05): Stop using the big PBMs? Yeah. They provide no value whatsoever. You can disaggregate them and go to—like, if you go to Business.CostPlusDrugs.com, we have a list of 30-plus pass-through PBMs that don’t, you know, play those same games and use our price lists and give you a price list. And we’ll take on some of the cost risk as well. And that way, you’ll own all your claims. You can talk directly to manufacturers. There’s so many additional benefits that the big PBMs introduce. Just stop dealing with them. And that start—like your hospital, right, that you work at that provides you benefits—they’re probably dealing with your—your PBM is probably a big PBM, and they’re, you know, they can’t—they’re not allowed to complain about the high cost of medicines because they’re contributing to the problem when they could be working with a pass-through PBM that saves them money and improves the wellness of their members.
Rohan Ramakrishna (00:53:59): Why do you think that’s—what’s preventing that shift from happening, or is it happening?
Mark Cuban (00:54:04): It is happening for sure. I mean, I go—I spend half of my time talking to CEOs and just embarrassing them by telling them, “Look, do it this way and you’ll save money and get better outcomes from your members than going through the big PBMs.”
Rohan Ramakrishna (00:54:20): Hmm. So our show is called Good Medicine, and we believe that it goes beyond science to include—and to chat about—the systems and humanity of care. And so I’m asking, from your perspective, after all that you’ve learned about this industry, what is the single most important ingredient for practicing good medicine in America today?
Mark Cuban (00:54:37): Communication. Hmm. You know, having enough time to communicate. It’s not that doctors can’t communicate. You just don’t have enough time to communicate. And if you can’t communicate, that’s where you get the information asymmetries where patients can’t make decisions, where they’re rushed to make decisions, and that’s where they run into problems. You can’t do the followup that you wanna do. And, you know, agentic AI will help with that some with the robo call, you know, “Have you taken your medicine?” and all that and, you know, “Come get your blood check,” whatever it may be. But communication is the key, you know? And then part two to that is, you know, and tell me if you agree or disagree: 95% of medicine is authoritative, 95% is an educated guess.
Rohan Ramakrishna (00:55:20): Mm. Yeah. Probably something like that. Yeah.
Mark Cuban (00:55:24): Right. Because no two patients are exactly the same. And you just have to take the value of your experience and say, “Well, I’ve seen this 137 times in, you know, however many times in a patient that’s similar to you, Mark. So this is what we’re going to do. But I have to tell you upfront that there’s risk associated with it, ‘cause I may see something I didn’t expect to see,” right? And so all those things and the uncertainty and the stress that that causes you and the patient and their family—communication is a key to that. But also, you know, I think AI will be a key as well. But here’s where I think AI is going to be a little bit crazy for medicine, because right now, when we go to ChatGPT, Perplexity, Gemini, etc., you know, it’s trained on everything that’s available on the internet, and that effectively diminishes the value of all the IP that every doctor or researcher ever publishes.
(00:56:19): Right? And so I think you’re going to see every branded research institution or hospital—the Mayos, the MD Andersons, etc., etc.—they’re gonna start to silo their IP, not publish it, and either do their own models or sell it to the highest bidder so that, you know, Microsoft Copilot—just to pick one outta left field—can say, “I’m paying all of you X number of millions of dollars per year.” But, you know, or JAMA or any—JAMA, right? That—I want all your—I think Open Evidence did that, right, where they did a deal with them. So they got that output, because we’re getting to the point now where everything was put on the net up until this year, effectively. And everybody trained on the same stuff. But if not everybody’s training on the same stuff, ‘cause it’s not available, that makes the doctor more important.
(00:57:10): And that makes which model you choose more important. And to your point, what is it, Roon? What did you call—what was the name of your business? Yeah. Roon.com. Yeah. Roon.com. Right? Yeah. Helping people choose which of the millions of models that are out there, right? To get the best. Or being able to aggregate the output and have the doctor be able to say, “Okay, yeah, I didn’t even think of this, this, this, but let me tell you—give you the voice of my experience, and let me bring in three other specialists that have been through this before.” Because no one specialist can give you all the answers. It’s impossible to know everything. Right? Right. It’s impossible to memorize everything. But that’s what AI models do. They memorize, right? And based off of what they’re trained on, they estimate what the—you know, the autocomplete. Let me put it:
(00:57:54): AI models are not smart. They’re just great at memorization. And they’re great at finding the most likely response to your question because they’ve memorized everything and seen comparable questions. But that doesn’t mean that they’re right, just like no one doctor can be absolutely right on everything. Right? And so it gives doctors the benefit of being able to have access. But you have to know where to look. That’s gonna be a skill, because there’ll be so many different models because of the economics of the industry. And you have to know how to aggregate all that information and communicate it to the uniqueness of your patient. So I think the value of doctors will increase. The need to be—to have agentic AI with assistants or whoever you work with—to be able to go through and look at these things, or you be able to do it, that’ll make you more efficient in how you learn and accumulate new information as new information is published. But even doctors will have to know which research facility is affiliated with who. Do you need to look at Open Evidence, and what’s good or bad about Open Evidence? Did, you know, ChatGPT make a deal, etc. So I guess that’s a long-winded answer to say: AI’s gonna become more important because things will be siloed, and you’ll have to—knowing how to use it correctly is important, but knowing how to take all the output because it is siloed will make doctors more valuable.
Rohan Ramakrishna (00:59:19): Awesome. One last question before you go. Sure. What’s your last— Me. What’s your message to doctors in 2025?
Mark Cuban (00:59:24): You’re underpaid. I’m gonna do all I can to get you better paid. You know, if my dream comes true, you all are playing golf on Wednesday, or at least getting shots up on the basketball court. You know, I think we waste way too much of your time because of all the overhead introduced by PBMs and insurance companies. Healthcare—the economics of healthcare is a really easy business. That’s why it’s been so easy to disrupt. The only—put aside the doctor side—the healthcare, the economic side—one: what’s the cost? Two: who pays for it? And three: who takes the risk of non-payment? And the risk factor right now, we assume, is insurance companies, but it’s not, right? They don’t really take much risk. You know, Medicare programs, ACA programs—those are all subsidized. 160 million people are self-insured employers that cover them, right? So they’re not taking much risk. So we need to find an alternate plan for dealing with risk.
(01:00:22): If you need a guarantor for a school loan, we’ll do that. If you need a guarantor for a housing loan, many times we’ll do that. If you need a small business loan or guarantee, we’ll do that—to the tune of more than a trillion dollars outstanding. If you’re fucked up in a car wreck and you can’t afford your deductible or don’t have insurance—good luck to you, right? Yeah. We have to solve that problem. Right? How do we help people? We don’t need insurance companies because they’re not taking insurance risk. They’re basically acting as systems operators, right? Or systems integrators. We can disaggregate all that, make that fee-for-service, but we have to come up with the way of dealing with the deductible and other risk. And you can do what, you know, universal healthcare does—and by the way, we have universal healthcare for 80-plus million people already on Medicaid and the CSRs on ACA plans, low-cost ACA plans.
(01:01:17): So we’re—we already do it, even if they’re not a hundred percent analogous. At some level. But for everybody else with the higher-deductible plans, maybe it’s a matter of just guaranteeing your deductible to the hospital. So the hospital knows that if they just charge a Medicare rate for the deductible—for whatever it is—or the net cost for a pharmaceutical, that the government will guarantee that they get paid anything that the patient isn’t able to pay. ‘Cause effectively, they kind of do it backdoor with DSH payments, right? So once we can cover—once we come up with a guarantee so that risk is off the table and the insurance companies and the PBMs don’t introduce all those costs—problem solved.
Rohan Ramakrishna (01:01:58): Yes, I love that. Well, Mark, thank you so much for your time. Really appreciate. I—
Mark Cuban (01:02:01): Really appreciate it. It was a fun convo.
Rohan Ramakrishna (01:02:03): Yes. Yes. Thank you for coming to Good Medicine. Means the world.
Thanks for listening to Good Medicine and a special thank you to Mark Cuban for sharing his perspective. If you’re a physician, we’d love for you to join the Roon community and continue the conversation with Mark at Roon.com. That’s www.roon.com. You can also help us grow by sharing this podcast with a colleague or friend. Until next time, thanks for being part of the conversation.
