Mark Cuban’s Plan to Make Healthcare Affordable

Cost Plus Drugs launched on January 19, 2022, with 111 generic medicines and has grown to roughly 4,000 SKUs. Mark Cuban says weekly business is growing and the main challenge is keeping up with demand. Its public prices and API let employers compare costs and ask other providers to beat them. A discount card works at 17,000 affiliated pharmacies, but Cost Plus pays a $12 fill fee, which can make some inexpensive drugs cost more. Specialty generics, biosimilars and some medicines requiring cold shipment may be cheaper through local pickup, and the arrangement also supports independent pharmacies.

Cuban argues that insurer ownership of providers and administrators can raise premiums, deductibles and out-of-pocket costs while steering customers to affiliated businesses. He cites UnitedHealth’s more than 3,000 subsidiaries and $150 billion in annual intercompany transfers, and says one company was told Cost Plus was in a major insurer’s network despite having no agreement with any of the three largest insurers. Employer-sponsored benefits cover roughly 155 million or more Americans; Cuban says 60% of people receiving employer healthcare are covered by self-insured employers that depend on administrators to process claims. Carrier-owned administrators can obscure contract terms and claims data and complicate reconciliation between what employers pay and hospitals receive. Julie says some national carriers have raised startup premiums by as much as 60% year over year.

Cuban sees AI-assisted review of benefits contracts as a near-term way for employers to catch unfavorable terms before signing or negotiating, not a way to repair healthcare economics or undo agreements already made. He points to the City of Dallas’s 1,335-page pharmacy benefit manager contract as an example of how difficult terms can be to identify. He says employers representing 67% of more than 160 million Americans could substantially reduce costs through contract review. Cost Plus also sells medicines to clinics, hospitals and other providers at cost plus 10% or 12%, which Cuban says can save hospitals millions of dollars annually. In direct provider contracts, he would avoid prior authorization and denials, pay agreed prices on time and cover or assume the credit risk for patients’ out-of-pocket costs; he seeks lower prices and permission to publish contracts for others to use or adapt.

Cuban’s Dallas manufacturing facility uses AI and robotics to fit production into 5,000 square feet and switch drug production every four hours. It makes generic medicines on the FDA short-supply list, including drugs used in hospitals and pediatric cancer care. Portable manufacturing pods can be configured for different medicines and deployed at sites such as disaster-response locations; each costs about $20 million. Cuban says the government was the first customer, the first pod had shipped and a second had been ordered. He expects sales of a couple hundred pods annually within two years and a couple thousand within five years. Domestic production could make tablets and generic drugs in Dallas for less than using Cost Plus’s Indian manufacturing partners, but each new generic drug application costs $365,000 before other fees and pod costs. Applications for 1,000 generics alone would total $365 million; FDA-related work puts the goal of selling $20 billion in pods annually roughly two years away.

Cuban proposes making contracts involving taxpayer money public without redactions, requiring nonprofit hospitals to publish detailed general ledgers, procurement receipts and procurement requirements, and letting patients count a lower price they find for care toward their insurance deductible. He says eight states already allow the lower-price deduction at some level and claims 72% of large insurers’ revenue comes from taxpayers. He would replace some reliance on insurance with an individually owned healthcare account funded at the amount of an ACA silver-plan premium in the participant’s state. For one Texas family of five at a particular income, he cites a $2,100 deposit. Account holders could use funds for medical or pharmaceutical needs and borrow beyond the balance up to a limit, with payroll deductions for repayment, stop-loss coverage and a government guarantee. The stop-loss threshold, illustrated at $40,000, is unsettled, and spending would need limits against inappropriate services. Any remaining balance and interest would go to the owner at age 65 upon entering Medicare.

Cuban says 40% of people cannot afford a $400 emergency bill and advises people to use AI to find nonprofit hospitals and ask about financial assistance before needing care. Eligibility can extend to 600% of the federal poverty level, which can exceed $100,000 for some families in some states. He also expects improving AI could eventually make DNA-personalized drugs extremely inexpensive, perhaps beginning with over-the-counter medicines, while flagging DNA privacy, scaling individual models and access to training intellectual property as unresolved issues. Doctors would still be needed for in-person assessment and to judge which questions and variables matter; more AI advice could even increase demand for in-person care. Cuban’s broader case is that better plans, more efficient networks, technology and direct contracts can lower prices, though patients must understand and use the available options.