When the Exclusivity Period is Over
In an industry famous for keeping its pricing models in the dark, Cuban’s drug company is fully transparent. Americans pay 244 percent more for prescription drugs than any other developed country, according to a 2021 study by RAND. That $17.10 is exactly 15 percent more than the cost of manufacturing Imatinib ($12) plus a $3 pharmacy fee. At first glance, Cuban’s new online pharmacy couldn’t have come at a better time.
The pharmaceutical industry says that they need that legal monopoly to recoup the expensive cost of research and development. In other words, if people like Mitchell want life-extending drugs for incurable cancers, then the drug companies need to be compensated for their hard work and innovation. There’s a logic to the pharma industry’s argument, but Mitchell says that they are leaving out some important details. For starters, most of the truly “innovative” scientific work is funded by taxpayers through National Institutes of Health (NIH) grants to research universities.
David Mitchell has an incurable type of blood cancer called multiple myeloma. Even though name-brand drugs only make up 16 percent of all medications prescribed in America, they are responsible for 88 percent of total prescription drug spending, according to RAND. He’s currently taking four non-generic cancer medications that retail for $935,000 a year. And while Americans only pay slightly more than other countries for generic drugs, they pay 344 percent more for the exact same name-brand drugs. Mitchell is the founder of Patients for Affordable Drugs Now, an advocacy group calling on lawmakers to limit the exclusivity rights enjoyed by name-brand drugmakers, among other major reforms that would lower drug prices.
Critics like Mitchell say that PBMs are incentivized, therefore, to keep drug prices high. Instead of marking up the medications to earn a fat profit, he only tacks on enough to cover his costs and keep the business running. Since Cuban is already filthy rich, he’s not in it for the money. One of the reasons why Cuban’s new company can offer such low prices is that it’s registered as a PBM, which means that it can negotiate its own deals with drugmakers. The “Build Back Better Act,” which was passed by the House of Representatives in November 2021, includes several provisions that would lower prescription drug prices for millions of Americans.
