Medicare could save billions buying generic drugs at Mark Cuban's prices

How can the U.S. government lower the high price of prescription drugs? It may need to look to tech entrepreneur Mark Cuban for answers. Medicare could have saved nearly $4 billion in 2020 by purchasing generic drugs at the same prices offered by Cost Plus Drug Company, Cuban's online pharmacy that launched this year, according to a study published Monday in the journal Annals of Internal Medicine. Cost Plus Drug offers certain generic drugs, such as the depression drug fluoxetine or blood pressure medication lisinopril, at discounted prices, by selling medications at a fixed markup of 15% plus a $3 flat fee, according to the company’s website. Cost Plus doesn't offer brand-name drugs or accept insurance, so patients pay for medications out of pocket.

The study "does show that Medicare is overpaying for some of the generic drugs," said Dr. Hussain Saleem Lalani, a researcher at Brigham and Women’s Hospital in Boston and the study’s lead author. "And this is a conservative estimate, so the actual savings are likely higher.” Researchers at Brigham and Women’s Hospital compared the price of 89 generic drugs sold by Cost Plus Drug in 2022 to the price paid by Medicare Part D plans in 2020. Medicare Part D provides coverage for a wide range of prescription drugs, including for self-administered drugs, such as for those to control high blood pressure or diabetes. After adjusting for changes in drug costs between 2020 and 2022, the researchers found that Medicare paid more on 77 generic drugs: $8.1 billion compared with $4.5 billion if Medicare had purchased the drugs at the same prices as Cost Plus. Only 12 drugs did not appear to offer any savings. The researchers did not account for out-of-pocket costs for Medicare enrollees, meaning it was unclear how much lower their cost at the pharmacy counter would have been had Medicare purchased the drugs at a lower price.