Wednesday, March 22, 2023

Bursting the Bubble of Over-Inflated U.S. Insulin Prices Still Leaves Behind a Very Broken U.S. Prescription Drug "Market"

The U.S. prescription drug market is fundamentally broken, which explains why a 2018 USC Schaeffer Center study found that commercially insured patients' copayments for generic prescriptions exceeded the total cost of the medicine more than a quarter of the time (28%), with an average overpayment of $7.32 (see for more on its research). Among privately-insured beneficiaries, another 2021 study also concluded that generic drug price declines between 2007 and 2016 were not being fully passed-through to consumers. Other academic research findings looking at government-run healthcare insurance, such as Medicare which covers seniors, have found pretty much the same dynamics at work. For example, Medicare Part D standalone drug plans paid $2.6 billion more in 2018 for 184 common generic medications compared with prices for the same drugs available to cash-paying Costco members according to other USC Schaeffer research. That also explains why researchers at Harvard Business School concluded that Medicare could have saved nearly $4 billion in 2020 simply by having people purchase generic drugs at Mark Cuban Cost Plus Drug Company (see for more).

As NPR's Dan Weissmann eloquently described the situation on his "An Arm and a Leg" podcast, in the U.S., "Filling a prescription means swimming with the sharks" The reason, as eloquently described by the director of the "Right on Healthcare" initiative at the Texas Public Policy Foundation David Balat, is because of the corporate middlemen who game the system and inflate the cost of vital prescription medications. In an editorial, he wrote: "Congress Must Protect Consumers From Predatory Drug Middlemen".

I wrote about my own experience a while back in a post I called "Turning PBM 'Arbitrage' On Its Head: Bypassing Insurance to Save" and I did save quite a bit for a while. But then, PBM's changed what they were doing. For example, Cigna's Express Scripts Cash-Pay Mail Order Pharmacy ceased operations on November 21, 2022 (I blogged about that at if you want to read about it). We had been using Express Scripts to buy two prescriptions, and we did save quite a bit of money, including 82% on one generic drug, and 56% on another. So, when we received that letter, we cut Express Scripts/InsideRx out of our process. It wasn't as if we didn't consider it, it's just that we found it was cheaper to use Mark Cuban's Cost Plus Drug Company on both of them. We paid slightly more for one of the two drugs ($1.50 more for a 90-day supply), while we saved about $2.00 on the other, so all told, it essentially cost my household the same thing, and in both cases, we cut our PBM Caremark out of the equation. The only difference is that I feel confident that Mark Cuban's Cost Plus Drug Company won't pull an Express Scripts by InsideRx move on us and stop selling the product or raise the price by a random, unexplainable 40% price increase just because the PBM believed it could get away with doing so. In fact, Mark Cuban Cost Plus Drug Company has been known to make a big deal when the company actually REDUCES prices on selected prescription drugs -- it doesn't happen all the time, but when it does, they like to make a big deal about it.

As the Pharmacists United for Truth & Transparency, a nonprofit organization dedicated to advocating on behalf of independent pharmacy owners described the situation: "The PBM trade organization known as the Pharmaceutical Care Management Association ("PCMA") recently launched a "seven figure advertising educate policy makers and the public..." to try and rehabilitate their image, while putting forward policies that will protect their profiteering empire, and continue to shift blame and accountability to anyone but themselves. Oh, and they're trying out a little name change too. PCMA now describes the Pharmacy Benefit Managers ("PBM's"), whom  recently been describing its industry as Pharmacy Benefit Companies ("PBC's") instead of Pharmacy Benefit Managers as part of a "seven figure" ad campaign. (see their article at for more).

However, my own sense is, there has been something of a shift in public opinion on predatory PBM middlemen. 

In part, the shift in opinion is because the underlying message about PBM's remains and unchanged, and its a falsehood. PBM's baselessly claim to be the "only members of the prescription drug supply chain that are working to lower drug costs" (see #OnYourRxSide, "PBMs are Working to Reduce Prescription Drug Costs for Millions of Floridians," PCMA, 2021. for more) when the evidence suggests otherwise.

Congressional lawmakers have rightly concluded the PBM's are a bad actor operating in a sea of completely unethical organizations. For example, Iowa Senator Chuck Grassley (R-IA) and Oregon Senator Ron Wyden (D-OR), in their 2021 study "Insulin: Examining the Factors Driving the Rising Cost of a Century Old Drug" concluded "This industry is anything but a free market when PBM's spur drug makers to hike list prices in order to secure prime formulary placement and greater rebates and fees," Senator Grassley said. "Tens of millions of Americans, from every generation and background, depend on insulin. This report pulls back the curtain on the drivers of spiking prices. It's a perfect example of why we ought to continue pushing for bipartisan legislation and oversight to address this problem." 

"This investigation makes clear that consumers are the only ones losing out in America's broken drug pricing system, since every part of the pharmaceutical supply chain benefits from higher list prices. Insulin manufacturers lit the fuse on skyrocketing prices by matching each other’s price increases step for step rather than competing to lower them, while PBM's, acting as middlemen for insurers, fanned the flames to take a bigger cut of the secret rebates and hidden fees they negotiate. Consolidation within the PBM industry has not improved the situation," Wyden said. "These findings make it clearer than ever why Congress must make fundamental reforms to the way drugs are priced and paid for."

For his part, Senator Grassley admitted that any of the much-needed reforms he believes need to happen are likely only to happen under a Democratically-controlled Congress (see for his admission of sorts), the Iowa Republican said in a 2022 Senate Finance Committee hearing "I think you suggested the difficulty of passing something like in a Republican Congress, so you got an opportunity to do it right now, when Democrats and Republicans can work together to accomplish this. If we want to reduce drug prices, then we need to do it now."

Sen. Grassley had tried for four years to bring legislation before the Senate, and Mitch McConnell refused to do so (even while Sen. Grassley warned him it could cost his party control of the Senate, which it did). That's why Sen. Grassley was a very active participant in 2023's Senate hearing on PBM's. He's been around long enough to know what will happen under whose leadership on the matter.

But beyond the shift in the tide against PBM's is the inescapable reality that Americans keep paying more and more for for prescription drugs, the prices never go down even when generic versions become available, and they are concluding some entity or entities are responsible for that. And, by process of elimination, the PBM's are the only entity remaining, hence PCMA's ad campaign is unlikely to have much impact; its repeats a tired message that Americans see is a falsehood every time they go to the pharmacy.

Yet according to the PBM Accountability Project's 2021 report entitled "Understanding the Evolving Business Models and Revenue of Pharmacy Benefit Managers" (see the report at for details), a better understanding of the overall financial incentives driving PBM behavior, as well as possible sources of conflict with their assertion was documented in its report. And, the conclusion seems to be that PBM's are really only good at one thing: figuring out ways for themselves to profit at everyone else's expense, and the main reason is because they operate without disclosure of what's happening behind-the-scenes.

That said, March 2024 brought an end to the insulin pricing balloon as the three major insulin manufacturers each announced their intention to opt out of the PBM markup game and instead simply bypass it instead. On March 1, 2023, Lilly announced list price reductions on its most commonly prescribed insulins, as well as an expansion of its Insulin Value Program (see the announcement at for more), then on March 14, 2023, rival Novo Nordisk announced practically the same thing (see its press release at for more info), and finally, on March 16, 2023, smaller insulin rival Sanofi announced that it, too, would slash prices for its own branded and unbranded insulins (see the Sanofi press release at for details). Collectively, these developments mean that all of three dominant insulin suppliers doing business in the U.S. have all announced their intention to slash list prices for their insulin products significantly.

Make no mistake, there is no altruism involved, they're doing it because doing so will save them money. 

The real impetus behind the dramatic insulin price cuts is likely the American Rescue Plan of 2021 (see for more). That law contained some provisions to improve healthcare access and affordability, including one that eliminates a cap on rebates that drug companies are required to pay Medicaid. If the cap was lifted with insulin list prices set as they are now, insulin makers might have had to pay Medicaid programs more than the price of their insulin products every time a Medicaid program had to cover one, likely totaling tens of millions of dollars in payments to Medicaid. But, with the lower list prices, Lilly, Novo Nordisk and Sanofi will dodge those extra payments. The rebate cap is set to lift January 1, 2024 — which is also when the companies' price cuts will fully kick-in.

And, not to be overlooked is something else also going on: Last summer, the U.S. Federal Trade Commission has been studying the Pharmacy Benefit Manager ("PBM") industry, and its study was approved in a unanimous, bipartisan vote. Ahead of publication of its PBM study, FTC issued a new policy statement (see for the statement). The policy statement put both drug companies and prescription drug middlemen on notice that paying rebates and fees to exclude competitors offering lower-cost drug alternatives can violate competition and consumer protection laws and that it intends to ramp up enforcement against any illegal commercial bribes and rebate schemes that block patients' access to competing lower-cost drugs. 

The FTC's enforcement policy statement outlines the legal authorities that may apply when dominant drug companies pay rebates and fees to middlemen to foreclose competition from less expensive generic and biosimilar alternatives, including:

  • Exclusionary rebates that foreclose competition from lower-cost medicines may constitute unreasonable agreements in restraint of trade under Section 1 of the Sherman Act; unlawful monopolization under Section 2 of the Sherman Act; or exclusive dealing under Section 3 of the Clayton Act.
  • Inducing prescription drug middlemen to place higher-priced drugs on formularies instead of lower-cost alternatives in a manner that shifts costs to payers and patients may violate the prohibition against unfair methods of competition or unfair acts or practices under Section 5 of the FTC Act.
  • Paying or accepting rebates or fees in exchange for excluding lower cost drugs may constitute commercial bribery under Section 2(c) of the Robinson-Patman Act, which prohibits compensating an intermediary to act against the interests of the party it represents in the transaction.

Of course, the FTC also voted unanimously on a bipartisan basis to initiate a 6(b) study of the PBM industry practices (see the news release at for more detail), which means even more scrutiny of payments paid to PBM's to exclude rival products which could be interpreted as illegal restraint of trade, and that study could potentially conclude sometime in 2023 (maybe 2024), and if evidence of any wrongdoing are uncovered, it could be referred to the U.S. Department of Justice's Antitrust Division, which could sue the relevant companies involved.

That said, insulin makers are first and foremost looking out for themselves and their shareholders, as they should because they have a fiduciary responsibility to their shareholders as publicly-held companies to do so. But the result is that patients will still see price reductions, as well as potentially a restoration of choice of which insulin works best for them. But restoration of patient and doctor therapeutic choice (e.g. the patient and/or their doctor being able to freely choose from either lispro, aspart, or glulisine [better known as Apidra] rather than the brand of insulin which the PBM selects based upon whoever is paying the biggest rebate kickbacks to the PBM). That benefits all patients, and is not limited to any particular sub-segment of the population. PBM's seized that choice from patients and their doctors, but with prices being brought back down to earth, perhaps we should be looking at it as a restoration of therapeutic choice.

Right now, dollars paid as rebates and other price concessions made to PBM's means patients are essentially forced to use whichever insulin variety is "preferred" by their insurance company's PBM (based on whoever pays the PBM the biggest rebate kickbacks), even when the "preferred" insulin varieties are NOT classified by FDA to be "interchangeable" with one another (as some biosimilars are, to get around that, PBM's simply refer to rival non-interchangeable insulins as being "therapeutically equivalent"; in fact they sometimes non-medically switch patients from one non-interchangeable insulin to another). 

Also, non-medical switching by PBM's is endemic in the U.S., and that reality has been marginalized as if it were no big deal, but it IS kind of a big deal when you're the patient. For example, when insurance company-affiliated PBM's non-medically switch patients from one insulin to another, insurance company PBM's do not agree to cover any additional blood glucose testing supplies to assist patients in adjusting their dosage ratios in order to accommodate their non-medical switches from one non-interchangeable insulin to another. They SHOULD, but they don't. Hence, restoration of therapeutic choice has genuine benefits for ALL patients with diabetes who use insulin. For whatever reason, no one is acknowledging this restoration of therapeutic choice as a patient benefit.

While the insulin pricing bubble appears to have been burst, let's not delude ourselves into thinking that the dynamics at work for the rest of the prescription drug market have been fixed because they have least not yet.

Thursday, March 16, 2023

Podcast Episode Recommendation: Our Curious Amalgam Podcast Episode 212

My followers may be forgiven for their lack of awareness, but on October 23, 2022, the man who lead the PBM known as Express Scripts (owned by commercial healthcare insurance company Cigna since 2018) named George Paz died at relatively young age of 67. Mr. Paz began at Express Scripts in 1998 as CFO. By 2003, he was president and by 2005, CEO. Paz retired as CEO in 2016, although he remained chairman until Express Scripts was acquired by Cigna in December 2018. The local newspaper, the St. Louis Post-Dispatch published his obituary HERE). While he was an admired business leader in St. Louis, one of the things his company became best known for was opacity and non-disclosure of what it actually did behind closed doors. That paved the way for rivals including Caremark (later CVS Health/Caremark/Aetna), and United Healthcare's PBM OptumRx to do the exact same thing. Collectively, the three largest PBM's now handle claims for some 80% of all prescription drugs sold in the U.S. today.

But today's post isn't about George Paz, but the unraveling the opacity the company he led made a core business strategy. I will admit there was once a time I actually respected the role of PBM's. The reason is because they once did what they now claim the industry does without providing any proof, which was to save the healthcare system (and patients) money on prescription drugs. 

However, over time, that ceased to be a reality. 

I believe that the PBM industry falsely presumed that their entrenched practice of non-dislosure and withholding information would somehow always protect them from scrutiny, and that was true ... for a while. But over time, greed from PBM's had become so egregious that it simply became hard for ordinary people not to notice. Consider insulin, which had become the poster-child for how broken the system had become. Everywhere else on earth, the price for a vial of insulin is around $40 or so. But, in the U.S., it was not uncommon for patients to be charged prices in excess of $250 for a single vial of insulin.

Hence, in spite of vertically-integrated PBMs' best efforts, its natural that ANY TIME some entity tries to hide more than a quarter of a trillion dollars ($236 billion as of 2021 according to the Drug Channels Institute, see for the source of that information), people are GOING TO NOTICE. Along with that, came the expected deserved scrutiny (including from academia) of what was really happening behind that supposed curtain of opacity.

Today, the biggest three players in PBM industry have de-volved to the point where any illusive savings they claim to create simply pads the bottom lines of their parent companies, but usually does not flow to covered patients. That has created business opportunities for startups including GoodRx and Mark Cuban Cost Plus Drug Company.

That's why some industry observers, including Pembroke Consulting's Adam J. Fein, who in several posts about how GoodRx profits from the broken U.S. pharmacy pricing "system", described the situation in one post this way (see HERE):

"Incredibly, three out of four consumers who used GoodRx already had commercial, Medicare, or Medicaid insurance. This means that someone—the consumer, their employer, and/or the government—paid insurance premiums for a pharmacy benefit managed by a PBM. Yet it was still worthwhile for people to bypass their plan's out-of-pocket costs and PBM network rates in favor of a different PBM's rates. As I explain below, such arbitrage creates potent conflicts between PBMs and their plan sponsor clients.

Don't blame GoodRx for this mess. I give it credit for helping consumers navigate a crazy system that incentivizes people to bypass their own insurance plans. But it’s hard not to dislike a system that enables these games."

Anyway, in my opinion, the PBM game is over. As I very recently blogged in a post entitled "The Insulin-PBM Rebate Kickback Scheme Appears to Be Coming to an End" about how the two biggest insulin-makers doing business in the U.S. today seem to have concluded the PBM commercialization channel, at least for patent-expired insulin varieties, is no longer a viable option. It took a variety of factors for us to get to that point, but that day appears to have arrived. I anticipate Sanofi (the maker of Lantus insulin) will eventually do exactly the same thing Lilly and Novo Nordisk already have announced because they will have no choice.

Which brings me to today's post.

Today, I'm sharing a particular podcast episode from the Antitrust Law section of the American Bar Association called "Our Curious Amalgam". Specifically, today, I am recommending a listen to one of their most recent podcast episodes entitled:

Episode "#212 A Sickness or a Cure for High Drug Prices? Why PBMs Are Under the Antitrust Microscope" 

Dr. Erin Trish, USC

In this particular episode, she interviews Dr. Erin Trish, who is Co-Director, Schaeffer Center for Health Policy & Economics at University of Southern California. A key point of discussion in the conversation is insulin. I believe this provides an excellent explainer for what's happening and why the FTC study announced last summer on the PBM industry. Hence, I think this episode provides a great explainer for what is happening with the insulin market and the broader U.S. pharmaceutical market generally.

This particular episode's web page is 

Tuesday, March 14, 2023

The Insulin-PBM Rebate Kickback Scheme Appears to Be Coming to an End

Last year, on March 3, 2022, in what I believe was a fantastic accomplishment relatively early in Aaron Kowalski's tenure as CEO, the JDRF and Civica, Inc. (via the company's CivicaScript operating unit) jointly announced Civica's intention to commercialize biosimilars of the three bestselling insulin analogues at an affordable price of $30/vial or $55/box of five insulin pens. The Civica press release can be seen at and a concurrent press release from JDRF can be seen at The plan is to introduce lower-priced biosimilars of the three bestselling insulin analogues now on the market (of Lantus, Novolog and Humalog, respectively), potentially as soon as 2024 (assuming they don't encounter unexpected regulatory delays). 

My followers may recall that not long after the Civica insulin announcement, I published an article on LinkedIn entitled "How the Civica Insulin Announcement May Be Disruptive to the PBM Kickback Scheme" (see the original at for the article). It appears as if the predictions I made were correct (that the biggest loser from the Civica insulin announcement would not be pharma, rather the likely loser from the Civica insulin deal would instead be the vertically integrated [with commercial healthcare insurance companies] PBM's), and those predictions appear to be coming to fruition now.

For example, in the year that's followed, on March 1, 2023, Eli Lilly & Co. announced (see the press release at for more) list price reductions of up to 70% on its most commonly prescribed insulins, as well as an expansion of its Insulin Value Program. Beyond that, Lilly announced that effective May 1, 2023, its unbranded prandial insulin analogue called simply Lilly Insulin Lispro Injection U-100 will be repriced to just $25/vial. Finally, Lilly also announced it would introduce an interchangeable biosimilar version of Sanofi's Lantus (sold in insulin pens only at this time) branded as Rezvoglar, at a price that's marginally less than Sanofi Winthrop's own unbranded product, but not necessarily the lowest-price Lantus copy, as Biocon's version remains slightly less costly.

Exactly two weeks later, on March 14, 2023, rival Novo Nordisk made a remarkably similar announcement, saying that on January 1, 2024, it too would be reducing the U.S. list prices on its branded prandial, basal, pre-mixed and biosynthetic human insulins, as well as reducing the list prices of its unbranded (including both aspart and degludec) analogue insulins (see the full PR at for details).

Then, two days later after Novo Nordisk's "me-too" repricing announcement, on March 16, 2023, the last of the "big three" insulin makers known as Sanofi announced it was also cutting the list price of branded (and unbranded) Lantus by 78% and it would establish a $35 cap on out-of-pocket costs for Lantus for all patients with commercial insurance (see the full PR at for details).

Neither Lilly, Novo Nordisk nor Sanofi expect their own insulin profit margins to fall as a result of these insulin list price reductions, raising the question: what changed? The reality is the latest pricing moves from Lilly, Novo Nordisk and Sanofi did not occur by accident. It involved many different things with a singular goal of ending the U.S. price disparities on insulin compared to the rest of the developed world.

For example, the looming threat of fines from Medicaid on their insulin list prices rising faster than inflation was a factor (and having an administration threatening to actually fine them over it). The real impetus was likely the American Rescue Plan of 2021; that law contained several provisions including one in which drug-makers generally (including insulin makers), who raised drug list prices faster than inflation (which applies when they raise list prices to give PBM's bigger rebates on the back-end) might have been forced to pay Medicaid programs more than the price of their insulin products every time a Medicaid program had to cover one, likely totaling tens of millions of dollars in payments to Medicaid.

Beyond that included a new FTC policy statement for the statement, and a formal bipartisan FTC announcement to study the PBM industry loomed large, as did the nonprofit drug maker Civica's announced plans to sell biosimilars of the 3 bestselling insulin analogs for $30/vial or $55 for a box of 5 pens as soon as 2024. In addition, there are now a host of other biosimilars in development from Sandoz/Gan & Lee, Lannett/HEC, as well as Amphastar/ANP in addition to Civica/GeneSys Biologics. These factors all contributed to the most recent insulin pricing announcements.

USC research has proven that middlemen (PBM's) now take home approximately 53% of the "net" proceeds from the sale of insulins, up from just 30% in 2014; while at the same time, the share going to insulin manufacturers has fallen by one-third (from $69.71 to $46.73). Big insulin is getting blamed for prices they do not control, and their margins are falling. Is it any wonder why they now want to escape from the PBM commercialization route (at least for patent-expired insulins)? They certainly are no longer benefitting from PBM sales model on insulin anymore.

Alas, with Lilly's, Novo Nordisk's and Sanofi's most recently announced insulin list price reductions, it's kind of a bad day to be a vertically integrated (with a commercial healthcare insurance company) PBM. One of their biggest cash cows (insulin rebates) appears to be headed to the proverbial slaughterhouse by these insulin pricing moves. But no one should worry about the PBM's; they don't care, and they'll likely just make up for it on rebates collected on a completely different therapeutic class of prescription drugs, because right now, there's nothing to stop them.

However, in the meantime, patients with insulin-requiring diabetes could soon breathe a bit easier without worrying about how they can afford to either pay rent or pay for insulin because prices are finally coming down to earth (mostly at the expense of PBM's who were stealing the money intended for patient price relief in the first place). No one should really be thanking our Congressional lawmakers because they did NOTHING to make this insulin price reduction happen except for seniors on Medicare. In fact, Congress recently extended the widely-abused (by PBM's) "safe harbor" exemption from the Antikickback Statute (see page 80 of the signed copy of the Inflation Reduction Act at for that language, largely to boost the score the bill got from the Congressional Budget Office). On the upside: there now at least appears to be bipartisan support and understanding for how PBM's are hurting consumers (see for more), which is a good omen for fixing a problem our own government created in the first place. Watch this space! 

Monday, March 13, 2023

Podcast Episode Recommendation: Politico Pulse Check, Episode 398

My followers may recall that I have previously shared a particular podcast (the episode I shared was about Mark Cuban Cost Plus Drug Company), specifically a podcast known as Politico Pulse Check. For a quick refresher, Politico describes its Pulse Check podcast this way: "Politico Pulse Check delivers the latest news in healthcare with sharp policy analysis and a dose of real-world perspective". In other words, "Pulse Check" is about healthcare and healthcare policy emanating from Washington, DC.

Anyway, on February 23, 2023, Politico Pulse Check had a rather interesting episode entitled "PBM reform effort intensifies on Capitol Hill" which was worth a listen. The episode is only about 10 minutes long, and yet they covered a few things which may be of interest to those with Type 1 diabetes interested in politics surrounding healthcare policy. Of particular note is how Politico now seems to be hinting that not only could we still potentially see legislation on PBM reform in spite of a divided Congress. Ordinarily, divided legislatures accomplish next to nothing, but this time could be different, at least when it comes to PBM reform.

It is still relevant to acknowledge that while Republicans managed to gain control of the House of Representatives during the midterm elections, they had the smallest gain in seats for any opposing party in midterm elections in recent memory. That led to some fake drama in naming a House Majority leader at the beginning of 2023. The reality is that Republicans currently have just an 8-seat majority in the House, which is a razor-thin majority which has important  implications which may not be readily apparent for casual observers on how the Congress operates (see also Politico's "The red wave that wasn't" at for more). 

For example, there are some important implications that House Republicans' tiny majority has on what Republicans in the House can accomplish by themselves. The reason is because under parliamentary rules, the House Republicans enjoy such a small majority that it means that all House committees are required to be composed of BIPARTISAN membership; and that reality means there remains a moderating force on whatever those committees in the House can actually do without bipartisan collaboration. And, in general, that also forces committees to consist of members from both parties.

Meanwhile, on the Senate side, we saw Senator Ted Cruz (R-TX) try to use parliamentary procedures to try and delay any progress on PBM reform for some peculiar reason (considering Texas voters are as impacted by the games PBM's pay as any other state). Under Senate rules, Committee chairs must still follow parliamentary procedures. Currently, Maria Cantwell (D-WA) controls the Senate Commerce Committee, not Ted Cruz. On Thursday, February 2, 2023, the Senate held a formal hearing on a bipartisan bill (meaning it has sponsors in both political parties, including Senator Charles Grassley (R-IA) that aims to get the drug middlemen to reveal to the FTC how much money they make through pharmacy fees and "spread pricing," a practice of charging insurers more for drugs than the PBM's actually pay pharmacies for the drug, and pocketing the difference for themselves.

That said, Ted Cruz remains on the Senate Commerce Committee as a ranking minority member, so his recent role on the Senate Commerce Committee was basically to try and delay the Senate from getting more information which the committee needed to get any proposed legislation out of committee and brought to the floor for a vote of the full Senate (a STAT News article kind of addressed that nonsense at, although the article may be behind a paywall). It really was mostly just dumb tactics used to try and delay things, because the Republican minority does not actually have the ability to prevent a bill from leaving committee or being brought to the floor by current Senate Majority Leader Charles Schumer. So the best a Senator who no one really likes (Ted Cruz) could do is to delay things. (The man is a real @$$#0l3.)

And yet ironically, today, neither political party is exactly enamored with PBM's right now, hence there DOES appear to be some bipartisan support for PBM reforms of some kind. Just what those end up looking like remains to be seen. In the Politico Pulse podcast, host Ruth Reader held a conversation with Megan R. Wilson. In the podcast, Ms. Wilson mentioned specifically that since Democrats took full control of the Senate, Ron Wyden (D-OR) now chairs the Senate Finance Committee. 

Ms. Wilson says that as part of that new Senate leadership role, in January 2023, Senator Ron Wyden hired a former lobbyist for the generic drug industry named Polly Webster to handle his drug policy. 

Ms. Wilson also says that the idea is that people who are working on the prospect of reforms to how PBM's are allowed to operate actually have people with knowledge about what really happens in the drug industry on staff which could be a big deal. 

But Megan Wilson also noted that it's currently unclear whether there's sufficient momentum for a standalone bill to be passed, hence she posits that it could potentially be included in some larger bill which has yet to be determined. However, the point is that there seems to be growing momentum on Capitol Hill to do something, and PBM's likely have targets on them.

That also explains why Megan Wilson acknowledged that exactly which bill PBM legislation gets attached to remains to be seen. But it is important to acknowledge that we could still see SOMETHING happen in 2023. To listen to the full Politico Pulse podcast episode, listen below or by visiting

Saturday, February 18, 2023

Dexcom Spends Big on Super Bowl Ad to Hype New G7 Claiming "Feels Like Magic"; But Formulary Exclusions Aren't Magic

This month was the U.S. NFL's Super Bowl #57; the two teams which played one another were the Philadelphia Eagles and the Kansas City (Missouri) Chiefs, and the Kansas City Chiefs were the winners in a close game throughout. For a moment, let's just overlook that Kansas City's team name is rooted in the same racism against indigenous native Americans (after all, the team's logo is an arrowhead, which was created by native Americans) the same view ultimately forced the old Washington Redskins to change the team name to the Washington Commanders), and let's instead focus on this year's game advertising. 

While I had an ever-so-slight preference for the Eagles to win given that I once called Philly home, that team played in the Super Bowl in 2018 and it won that year, hence some of the Eagles already have Super Bowl rings. Likewise, Kansas City last played in the Super Bowl 54 in 2020 and won that year, so that team was more-recently awarded Super Bowl rings. But Missouri isn't Pennsylvania. Hence, I really didn't really care very strongly if either team won this year.

Anyway, Dexcom, Inc., a former med-tech startup which grew into a full-grown med-tech company spent an estimated $5.5 million to $7 million this year according to advertising industry estimates (technically, it may have paid for the ad in 2022 to get a better price) to run a Super Bowl ad starring a former pre-teen family boy band known as the Jonas Brothers' member Nick Jonas as spokesman. He's now a full-grown adult in the ad, in which he claims that Dexcom's new G7 model "feels like magic" for managing your diabetes.

Sorry, Nicky, but Dexcom G7 assuredly isn't magic, and most patients will actually have to pay something for the benefit that you claim "feels like magic". In fact, they may pay a hell of a lot more for Dexcom than they would for rival CGM systems like Abbott Freestyle Libre 3 (which, incidentally, is SMALLER than Dexcom G7 is).

It would be "magic" if Dexcom REDUCED the prices of its sensors. The reason is because they assuredly aren't cheap, and they have a shorter wear-time of less than two full weeks vs. 14-days compared to its biggest rival. And, cash-payers are indirectly paying for the $5.5 million to $7 million Super Bowl advertising via rebate kickbacks paid by Dexcom for exclusive PBM formulary placement.

Yes, that's happening, too. Do you like paying for kickbacks? You shouldn't. If you don't, you may want to have a conversation with your elected lawmakers in Washington about the pharmacy kicback problem pushing U.S. Rx drug and prescription medical device prices ever-higher.

Dexcom Is No Bargain; Abbott Freestyle Libre 3 Costs 30% Less Than Dexcom

I recently had a conversation with a Wall Street analyst about this. For example, while the prices of Dexcom sensors and Abbott Freestyle Libre sensors are very comparable with one another (according to Costco's Member Prescription Program, the price for one box of three Dexcom G6 sensors; which is the only product sold as I wrote this was $183.64, which means the cost on a per-sensor basis was $61.21 per sensor. By comparison, Costco Pharmacy's price for a box containing a single Abbott Freestyle Libre 3 sensor was $61.78 so the net difference was just $0.50. I had a coupon for one Libre 3 sensor, which I bought at Costco Pharmacy, so my price was $0). 

In other words, the price difference between the two CGM brands is negligible at best. But, wear-time shifts that calculus a lot.

Its not simply the gross price of the CGM sensors themselves, but the length of time patients can wear them which determines cost differentials. Dexcom only permits patients to wear its CGM sensors for 10 days (or less than two full weeks per sensor), meaning if there are 31 days in a month, that box of 3 Dexcom sensors won't even last you for the entire month), while each of Abbott's Freestyle Libre 3 sensors permit patients to use three sensors for 14 days each, which means 3 sensors will last the patient 42 days, compared to 30 days for a box of three Dexcom sensors. Conversely, you can get 28 days out of just two Libre 3 sensors. Meaning: Libre 3 definitely save patients money over Dexcom G7. The net difference is about 30% less than Dexcom.

Of course, insurance introduces a new level of messiness to the cost equation. Allow me to explain.

You need to ask: Does insurance cover part of the cost? What percentage? If you're on a plan that has a deductible to satisfy, what percentage of the cash price you end up paying for the sensors actually reduces your deductible and by how much? In general, the lower that cash price you end up paying for a CGM sensor does tend to benefit your wallet, because remember: you aren't getting credit applied towards the deductible for what you actually pay for the sensor, but for the negotiated "net" price the PBM negotiates on behalf of your insurance company. Hence, Costco has pretty good prices on CGM sensors, and it may be worth buying them from Costco Pharmacy (although the savings will be only a few dollars over what CVS, Walgreens or Rite Aid might charge you). Some people can't be bothered to go to Costco to save only a few dollars since they wear the sensors daily.

But critically, the shorter wear-time for Dexcom's CGM sensors guarantees that Dexcom ends up charging patients 30% MORE money for its CGM system than Abbott charges for its newest Freestyle Libre 3 system (plus the new Libre 3 also includes full data sharing and alarms which weren't always readily available in older systems, although alarms of 55 mg/dL were included automatically as long as it was in-range of your smart phone). If you're paying out-of-pocket for sensors until a deductible is satisfied, then YOU the patient are picking up that extra 30% cost for Dexcom systems, and therefore indirectly paying for the Nick Jonas Super Bowl ads. That doesn't feel like magic to me, it feels like someone is pick-pocketing me and trying to do it in a way that we won't know what they're doing.

A somewhat less critical point is that Abbott sells Libre sensors individually, while Dexcom forces patients to buy 3 sensors at a time (although it may sell Dexcom G7 sensors individually as Abbott does with Libre 3; that's unclear to me right now). If you're close to satisfying a deductible, having the ability to buy a single sensor could also be enough to satisfy your deductible without having to pay for two more sensors out of your own pocket.

Translation on Formulary Exclusions for Rival CGM Systems: Dexcom Likely Bribes Two Large PBM's with Kickbacks

That said, it appears that Dexcom may be bribing (admittedly, such cash payments are considered [right now, anyway] to be "legally-exempt" kickbacks, but let's be honest: a bribe is still a bribe) several big, vertically-integrated (with health insurance companies) PBM's to prevent patients from having access to less costly rival CGM's such as Abbott's Freestyle Libre CGM system if they use insurance to pay for for CGM sensors. Adam J. Fein, CEO of Pembroke Consulting, recently wrote about big three PBM formulary exclusions at which is worth a read.

Most notably, CVS/Aetna's Caremark PBM unit "prefers" Dexcom CGM's over rival CGM systems (meaning if a patient is covered by Aetna, they simply can't get Abbott Libre systems covered by insurance, even if that rival system IS 30% cheaper, unless the patient pays cash for it, so it really depends upon the particulars of your Aetna plan, but it could potentially be worth bypassing your insurance for at least part of the year if you're paying cash for everything until satisfying a deductible, and your insurance won't cover the cost of CGM's until the deductible is satisfied, because Libre 3 sensors last longer and you're paying cash for them anyway).

But sometimes insurance pays for a portion of your CGM sensors before you satisfy a deductible. That makes things less certain.

Personally, I'm covered (at the moment, anyway) by Aetna, which is owned by CVS Health which also owns the PBM Caremark and the CVS retail pharmacy chain. Prior to satisfying this year's deductible, Caremark/Aetna/CVS Health charged me a price of $122.54 for a box of 3 Dexcom G6 sensors, which is an out-of-pocket cost of $40.85/sensor, and that translates into a daily cost of $4.09/day. I saved my receipts from 2022, and to be honest, CVS changed the price I paid slightly practically every time I filled my Dexcom sensor script which was beyond weird. For example, on April 13, 2022, I was charged a price of $110.90 for the exact same quantity of the Dexcom G6 sensors, but the next refill charged me $114.75, so its anyone's guess what's really happening behind the curtain.

Costco Pharmacy Member Prescription Program A Decent Pricing Barometer for the Cost of CGM Sensors

I also turn to the Costco Pharmacy Member Prescription Program to be a reliable barometer of prescription drug prices (its never the lowest-cost on ALL prescriptions, but it is forthcoming about its prices if it sells something), and its price was $183.64 for a box of 3 Dexcom G6 sensors. By comparison, GoodRx also reveals prices (but those are PBM-driven prices, and one doesn't know which PBM formulary they are using, or even which PBM is offering those prices) and the GoodRx price for a box of 3 Dexcom G6 sensors varies depending on where you buy the product.

According to GoodRx, Costco should be charging me $164.63 (and maybe it would be with a GoodRx coupon). By comparison, GoodRx's price at CVS was $180.88 for 3 Dexcom G6 sensors, although GoodRx is also partnering with Dexcom to offer cash-paying customers a manufacturer coupon to buy a box of 3 Dexcom G6 (or G7) sensors for $136.13. I had less luck with SingleCare. Its product description said Dexcom, but the text underneath said Freestyle Libre, so I was clueless what the hell it was talking about.

I also investigated a number of coupon-generating app alternatives, including drug wholesaler McKesson's coupon-generating app known as ScriptHero which is powered internally by CoverMyMeds (as well as SingleCare when CoverMyMeds can't offer a discount on a particular prescription), and its price at the CVS Pharmacy near me was $136.13 for 3 Dexcom G6 sensors, or a cost of $4.54/day.

The coupon low-price leader turned out to be MedImpact's (which is/was Kaiser Permanente's PBM; at least it was until Kaiser dumped MedImpact for Cigna's Express Scripts) ScriptSave WellRx which has a coupon to buy 3 Dexcom G6 sensors from Rite Aid pharmacy for a price of $127.34, or $4.24/day. The winner using a PBM coupon was from Rite Aid using a WellRx coupon, at a price of $127.34, or $4.24/day. But it was still cheaper to use my own insurance (albeit not by much), plus Rite Aid isn't conveniently located near me.

Current CGM Price Differential Was Implemented With Near-Surgical Precision

Today, I could alternatively just opt to buy a Freestyle Libre 3 sensor from Costco Pharmacy for a cash price of $61.78/sensor, which equates to cash cost of $4.41/day.

Curiously, the cash cost differential of Libre 3 just so happened to be 32% MORE costly for me personally, making it marginally more costly for me to switch to Libre 3 and pay out-of-pocket rather than by using my insurance to buy Dexcom G6, but not by much.

Its rather curious how that worked out in my case.

By that, I mean that Caremark made the price just cheap enough for me to stick with Dexcom and use my insurance to buy it, as opposed to me paying cash for the less costly Libre. I can only surmise that HAD to cost Caremark a fair amount out of its ordinary rebate spread, but not quite enough to persuade me to just bypass insurance. That cost differential was implemented with near-surgical precision; but it assuredly was no accident. Remember: Caremark would make zero rebate spread if I bypassed my high-deductible insurance plan to buy CGM sensors, so it walks a fine line.

Similarly, United Healthcare Group's Optum PBM business also excludes non-Dexcom CGM's from its formulary by Optum "preferring" Dexcom CGM's since it will not cover rival CGM systems.

No Express Scripts Formulary Exclusion on CGM Sensors ... For Now

Curiously, only Cigna's Evernorth business unit, which consists primarily of the PBM known as Express Scripts (a.k.a. "ESI", which stood for Express Scripts, Inc. when it was still an independent company), DOES NOT currently appear to "prefer" a particular CGM system. I certainly wouldn't put it past Express Scripts to try and pressure Dexcom to pay it legally-exempted rebate kickbacks to keep Abbott Freestyle Libre 3 off-formulary at some point in the future, but it's lawyers are likely watching the FTC PBM study and policy statements very carefully before it pushes Dexcom on that. Part of the reason is because ESI has been a PBM a LOT longer than the others, and the FTC likely has a lot more data on what ESI has done (the FTC effectively subpoenas info, and ESI needs to be worried about the data it sent to FTC).

Undoubtedly, that's a concern as to why ESI hasn't yet pushed for formulary exclusion kickbacks. We should see the FTC study conclude sometime in in Summer 2023, and depending on its findings, it could then be referred to the U.S. Department of Justice's Antitrust Division for litigation. Watch this space!

Dexcom's Super Bowl Ad Boondoggle

The Dexcom Super Bowl 57 ad "It Feels Like Magic" featuring a grown-up Nick Jonas can be seen below, or by visiting


Now, while Dexcom's estimated $5.5 million to $7 million Super Bowl 57 ad featuring former boy band member Nick Jonas may CLAIM that the product is for ANY type of diabetes (he says so in the ad), but the reality is that Dexcom and its CGM rivals at Abbott, Medtronic, and Senseonics/Ascensia have not really done the work necessary to secure widespread coverage of their CGM's for non-insulin requiring patients with Type 2 diabetes.

For example, United Healthcare's Optum says a patient has to be using insulin or it won't pay for CGM's on commercial healthplans (it might if its a Medicare plan and the government is paying for it). Some commercial insurance plans will cover them (at least for certain plans; in general, insurance tends to deny coverage for patients with T2D who are not using insulin under the notion that those patients can live just fine without expensive CGM's).

In other words, Dexcom simply did not really finish its homework before spending that $5.5 million to $7 million on expensive Super Bowl ads with a message saying G7 is "for anyone with diabetes". I suspect the company is kind of aware of that, which explains why its currently doing a coupon deal with GoodRx to overcome that issue (more on that in a minute).

As I said, its rivals are in a similar predicament, but spending cash to generate demand among a patient population which may or may not be able to get insurance coverage of the device seems like pissing a lot of cash away in my view. For example, Abbott is mass TV advertising Libre (mostly ads for Libre 2 so far), but those ads tend to be cheaper than $5.5 million to $7 million for a single Super Bowl ad (depending on their ad-buyer). However, Abbott is still introducing itself to the market, Dexcom is not doing the same thing.

Rival Abbott, however, is currently targeting an older, more overweight demographic if FiercePharma's article is correct (see for the article) which I would presume means that it sees opportunity in the largely untapped Type 2 market for CGM's. But demographic ad targeting aside, its still unclear whether either company's ads are expenses that are delivering for the companies.

Abbott spends a lot of money on ongoing TV ads running all the time in order to build awareness in a market Dexcom dominates right now (even if the messages presume that diabetes patients are newly-diagnosed patients who could easily get the exact same info. from far  less frequent fingerstick test after meals). That's why insurance coverage of CGM's for non-insulin users remains pretty weak. Compare that regular expenditure to Dexcom's occasional big splurge on Super Bowl ads which are forgotten about pretty quickly. Is either more effective? Advertising execs might claim yes (although big advertisers like P&G, Unilever Coca Cola and Pepsi would say that ad repetition is really key, not singular advertising at big events), hence others remain skeptical.

Dexcom Pays PBM's for Formulary Exclusions of Rival CGM's

However, given the Dexcom formulary exclusions at Aetna CVS Caremark and United Healthcare Optum means Abbott still has its work cut out for it. While Dexcom claims that 70% of patients with insurance have some form of coverage, that coverage varies widely. Patients with deductibles don't see nearly as much Dexcom coverage as others, which makes paying cash and bypassing insurance compelling for that audience. That explains why GoodRx has signed a coupon distribution agreement with Dexcom.

As I write this, GoodRx was offering an exclusive Dexcom coupon deal which enables patient to save $200 or more every month on the Dexcom G6 CGM System for eligible cash-paying patients. It enables those patients to get $200 off the monthly price for Dexcom G6 sensors, and $200 off the Dexcom G6 90-day transmitter, which over a 3-month period, patients could save up to $800 off the complete Dexcom G6 CGM system. I have so many G6 batteries I won't run out of them anytime soon. And, transmitters are going away with G7.  

Abbott Could Copy Dexcom's Strategy for the Un/Under-Insured: Coupons (GoodRx or Others)

Likewise, Abbott still has work to get its CGM system even covered by two of the three largest PBM formularies. 

That said, as noted, Abbott's biggest rival Dexcom has a coupon-offer with GoodRx may just be the type of work-around for the formulary exclusions Dexcom has worked out for itself. And, Abbott doesn't have to orchestrate a coupon deal with GoodRx, it can probably do a similar coupon deal with any of the many rival coupon apps.

Today, there are a whole bunch of rival coupon-apps in business, although Boston-based RxSense Prescription Management LLC (whose corporate HQ address is 99 High St Ste 2800, Boston, MA 02110, although it has a legal address of Rx Sense Prescription Management LLC, 5920 Odell St, Cumming, GA 30040) has a business model which differs slightly from most of its competitors including GoodRx in that its discounts come from the pharmacy margins/spreads themselves, rather than via third-party PBM's. SingleCare might be willing to offer coupons for Abbott Freestyle Libre CGM's if GoodRx won't because of its coupon deal with Dexcom.

Super Bowl: A Costly Experiment Which Might Not Deliver

Dexcom just used a svelte, youthful Nick Jonas apparently to try and retain Type 1 market share for Dexcom, whereas Abbott is paying for messaging in what appears to be aimed primarily to newly-diagnosed Type 2 patients. Dexcom boasts that it has negotiated insurance coverage of some sort for about 70% of Americans, although there are still even more than 30% who are covered by high deductible health plans, so the coverage isn't really 70%. That explains the GoodRx coupon distribution agreement Dexcom is currently doing. In other words, Dexcom still hasn't gained anything close to universal, pre-deductible coverage for its CGM system yet, so to offset that uncomfortable reality, its offering everyone else discount coupons.

Unfortunately for Dexcom, the average demographic profile for a typical Super Bowl viewer tends to look more like the people in Abbott's Freestyle Libre ads than the youthful picture presented in Dexcom's Nick Jonas Super Bowl ad, raising further questions about Dexcom's Super Bowl ad spend.

According to Ad Age, Super Bowl ratings for 18-to-49-year-olds — the prime demographic for advertisers, has been falling in recent years. More importantly, when you look at 18-to-49 "Sunday Night Football" ratings, which have been remarkably steady over the years, those have also been falling for the 18-to-49-year-old demographic. While there still are plenty of hard-core football fans who are tuning in each week, the game (including the Super Bowl) has seen fewer casual fans and non-sports viewers tuning-in. That is an NFL problem, but it directly impacts Dexcom if it's spending millions on the game's biggest night.

Meanwhile, Abbott CEO Robert Ford said at the J.P. Morgan Healthcare Conference in January (see the article at for more details) that Abbott aims to grow its Freestyle Libre continuous glucose monitors into a $10 billion product over the next five years. I remain skeptical of Abbott's strategy for delivering on that promise. 

Insurance companies still aren't persuaded they should spend millions paying for CGM's for Type 2's who don't use insulin. After all, many insurance companies still won't cover CGM's for non insulin using Type 2 patients, but they usually will for Type 1 patients (thanks largely to JDRF advocacy groundwork laid years ago). Ignoring the Type 1 user base is a foolish bet if you sell CGM's. I'm not sure any strategy that ignores that the core potential customer-base is a way to grow your product to a $10 billion business.

But neither company's strategy (Dexcom's retaining share of T1D CGM users or Abbott's converting T2D into CGM users) is ideal, and each faces significant barriers. Dexcom still enjoys name recognition as the first CGM on the U.S. market, but will it still work if FTC and U.S. DOJ sue PBM's over rebates and formulary exclusions and its rival is 30% cheaper out-of-pocket?

So instead, we are seeing companies like Dexcom collaborating with GoodRx to offset its evident weaknesses in the un/underinsured customer base. But Abbott can do the same thing (if not with GoodRx, then with a rival like SingleCare), then it will come down to price, and if Dexcom wants to win, its sensor prices need to come down which will eat into the company's margins. But spending $5.5 to $7 million on a Super Bowl ad likely won't shield it from that competitive pressure.

Wednesday, February 15, 2023

Two More Podcast Episode Recommendations

Today, I'm recommending TWO seperate podcast episodes which you might find informative.

They come from Dr. Zubin Damania, MD who's an internist who describes himself as a UCSF/Stanford-trained physician and he calls his weekly podcast as ZDoggMD. The other one is an interview with Dr. Marion Mass, MD who is a Pediatrician working in Chalfont, PA whom I've come to respect for her efforts to expose systematic wrongdoing in the business of healthcare.

I'll start with ZDoggMD's recent podcast episode. I'm posting the YouTube version of his February 14, 2022 podcast entitled "The Ugly Truth Behind Soaring Drug Prices (And How To Fix Them) w/Dr. Alex Oshmyansky". Dr. Oshmyansky is the CEO of Mark Cuban Cost Plus Drug Company, and I've shared some prior podcast recommendations in which he was interviewed.

Recall that I've been covering certain aspects of the Mark Cuban Cost Plus Drug Company in which Alex Oshmyansky is a part, perhaps most prominently in my coverage of the startup HERE.

The episode of ZDoggMD's is called "The Ugly Truth Behind Soaring Drug Prices (And How To Fix Them) w/Dr. Alex Oshmyansky" can be found at or the YouTube version of the podcast can be watched/listened to below. It is also found under the title ZDoggMD wherever you get your podcasts.

Next up was the podcast called "Rx for Success Podcast with Dr. Randy Cook", and specifically the episode #141 entitled "The Racket: How Our Healthcare System is Cheating Us" which interviews Dr. Marion Mass, MD whom I've come to love because she's a Pediatrician with a way of explaining things so anyone can understand the diagnosis. I love her quote:

"You can't fix the price of insulin or most drugs without reform of these Pharmacy Benefit managers."

Catch that episode at, or below.

With that, I'll end today's blog post. Happy listening!

Tuesday, February 07, 2023

Mark Cuban Cost Plus Drug Company ("MCCPDC") PBC May Be Able to Say "Mission Accomplished" Even if Sales Stop Growing

On January 19, 2022, a startup called the Mark Cuban Cost Plus Drug Company ("MCCPDC") opened its doors to the American public as a new online pharmacy and generic manufacturing startup. Initially, MCCPDC was also planning to launch its own Pharmacy Benefit Manager, but it later scrapped those plans, instead announcing several PBM partnerships with some PBM startups which do not engage in "spread pricing", including on generic, biosimilar and "authorized generic" drugs. 

The company bears the name of its famous principal investor, multibillionaire Mark Cuban, who is perhaps best known as both owner of the NBA team the Dallas Mavericks, and also as co-star of TV's long-running (now in its 14th season) reality show "Shark Tank". However, the MCCPDC was blind-pitched in an email sent to Mark Cuban by the brilliant Dr. Alex Oshmyansky (see "Meet the Genius Who Convinced Mark Cuban to Sell Drugs", October 11, 2022, D Magazine, Mr. Cuban was persuaded by his idea—so much that he told Forbes he was willing to put his own name on the company, something Mr. Cuban says he had never done before. When MCCPDC began operations, the company initially offered a limited inventory of just over 100 generic meds, although some were offered in different doses (potencies).

Unique Feature: Being Organized as a Public Benefit Corporation (PBC)

The Mark Cuban Cost Plus Drug Company (MCCPDC) is legally organized as a Public Benefit Corporation (PBC), which means that the company isn't a non-profit, nor is it a for-profit entity whose sole mission is to maximize returns to shareholders at the expense of everyone else. Instead, it is organized as a Public Benefit Corporation, hence it is a for-profit entity which has a broader core mission than simply ever-higher returns to company shareholders, its mission includes business objectives to fulfill a broader societal mission and that mission must be used by the company to navigate critical business decisions. It is not simply attaining Board of Directors rubber-stamp approvals as it is with many other corporations. Being a PBC also enables it to get funding from venture capitalists which non-profits don't typically enjoy the benefit of. 

The reason is because PBC's must include in their charters one or more specific public benefits as their statement of purpose, as opposed to the typical boilerplate "any lawful purpose" language usually contained in most for-profit business charters. This embeds a PBC's core mission into its founding documents and provides the company with a core mission that the company must be guided by, beyond simply maximizing returns to shareholders.

Mark Cuban Cost Plus Drug Company's mission is written into the company's charter (see for more) which is "to dramatically reduce the cost of [prescription] drugs, but it is just as important to introduce transparency to the pricing of drugs so patients know they are getting a fair price." That part is truly unique, and the mission has potential to be disruptive to drug distribution system leeches (such as PBM's) who profit from preservation of the costly status quo by withholding information from key stakeholders.

Counting Medicines Offered by MCCPDC

During the year since the company formally began operations, the startup has steadily expanded the number of drugs it sells. As of September 2022, MCCPDC was selling approximately 350 unique generic prescription drugs that it said reflected manufacturer prices plus a 15% margin, a $3 pharmacy handling fee and $5 shipping fee (including the cost of the pill bottle, an envelope and cost of shipping) with the biggest cost add-on being the amount it spends to send a prescription package with a carrier such as USPS. 

In October 2022, Katie Couric Media reported (see for the article) that the company was offering more than 800 drugs and counting, and the company was serving more than a million consumers at the time. Still, it was unclear if those figures included the same generic drugs sold in different potencies, unique NDC numbers or something else.

Early forecasts predicted that MCCPDC could potentially offer anywhere from 1,700 to more than 2,000 prescription (primarily generics) drugs by the end of 2022. We simply don't yet know what the final number ended up being, or what the reports even mean when they cite a number of prescription drugs offered.

But we got a little more clarity on November 22, 2022, when Becker's Hospital Review reported (see for the article) that "Mark Cuban's online pharmacy now offers nearly 1,000 generics after adding 82 [more] drugs to its repertoire, the company said on November 21, 2022. The company now sells approximately 350 unique drugs, or nearly 1,000 total products when taking varying dosages of the same drugs into account."

As acknowledged, the discrepancies on the number of reported drugs MCCPDC actually sells depends upon whether the count is for truly unique products (for example, many would NOT consider 10 mg tablets different from 20 mg tablets of the exact same drug to be considered truly "unique" drugs sold), but we can safely say that that the company is on its way towards fulfilling its broader mission statement as a Public Benefit Corporation, which is broadly to ensure that "No American should have to suffer or worse—because they can't afford basic prescription medications". To put things into relevant context, it's helpful to remember that just over a year ago, the company did not even offer a single product!

According to a 2021 FDA Annual Report (see for the report) published by the U.S. FDA's Office of Generic Drugs, the FDA had approved more than 10,000 generic drugs.

Alex Oshmyansky
But, as MCCPDC company co-founder Dr. Alex Oshmyansky revealed in an interview with D Magazine (which stands for Dallas Magazine, see for the article), telling the magazine that he found that many [generic] drugmakers actually prefer to work with his company because they eliminate the drug distribution system middleman who distort prices, including PBM's. 

That's great!

Indeed, journalist Teresa Carr reported in Salon (and elsewhere, see for details):

U.S. prescription drug pricing typically works by using intermediary companies known as Pharmacy Benefit Managers, or PBM's, to negotiate rebates on behalf of insurers and, in turn, keep a sizable bounty for themselves. So, even though a PBM may negotiate 90% off the price of the cancer treatment imatinib (generic Gleevec) they play games with patient out-of-pocket prices keeping the difference for themselves. This enables Mark Cuban's company to offer a one-month supply of the same drug for just $47. Yet employers and people with high-deductible plans may still wind up paying about $3,200 monthly until their deductible is met—for a drug that costs about $35 to make, said Oshmyansky. The Mark Cuban Cost Plus Drug Company's strategy is to eliminate these middlemen. 

So far, the underlying Mark Cuban Cost Plus Drug Company's strategy of bypassing the greedy, self-serving middlemen appears to be working. 

Today, the Mark Cuban Cost Plus Drug Company (MCCPDC) sells all of the products in its online pharmacy at the lowest possible cash-prices with a fixed margin of 15% on every product it sells used to keep the company going. In fact, the company often makes a big deal on social media when it announces price reductions. In that way, MCCPDC operates similarly to some independent pharmacies whose goal has always been to serve the communities in which they operate, or even similar to some bigger retail rivals like Costco Wholesale do with its pharmacy operations (catch my previous post on that at for more). The underlying business model enables patients to simply bypass their own insurance companies to save themselves money to buy what should be less-costly generics, but frequently are not thanks to drug pricing arbitrage (catch my post introducing the term "arbitrage" at for more) of drug wholesalers and pharmacy benefit managers ("PBM's"). 

Quite frequently, as many of its customers have discovered, the MCCPDC's out-of-pocket costs for the drugs are often even cheaper than insurance company co-pays would have been for the very same drugs. Indeed, academic research from University of Southern California has proven this to be accurate one-quarter (25.5%) of the time ("U.S. Consumers Overpay for Generic Drugs", By Erin Trish PhD, Karen Van Nuys PhD and Robert Popovian PharmD, May 31, 2022, University of Southern California, This is especially true for anyone who has a deductible to satisfy before their insurance covers much of anything. If MCCPDC's prices are not lower, the patient always has the alternative to use their insurance/Medicare/Medicaid if that's cheaper for them. However, many patients (including me) find that it's easier to stick with MCCPDC even after satisfying their deductibles which ordinarily would put their PBM's on the hook to cover those drugs. The patients say that MCCPDC offers them an honest price, and there's no reason to switch back and forth between suppliers for a few months as long as they're getting a fair price.

(see for more information)

Bypassing Drug Channel Middlemen is a Core Business Strategy to MCCPDC

Hence, it seems abundantly clear that a key component of MCCPDC dramatic cost-savings is accomplished by cutting out or simply bypassing the self-serving drug channel middlemen (including both drug wholesalers and PBM's, who are both responsible for most U.S. drug price inflation through a combination of list price inflation, brand-name drug rebate aggregation, and egregious "spread pricing" used to generate income for the PBM's on what should be low-cost generics). That's something Mark Cuban Cost Plus Drug Company is fundamentally disrupting with its business model.

Mr. Cuban told Axios: "Not everyone sets the goal of being the lowest cost producer and provider. My goal is to make a profit while maximizing impact." Note that Mr. Cuban did NOT say his aim was to become the most profitable drug company on earth, or to someday sell his company for mega-profits down the road. Part of the PBC objective is to "maximize impact" across society. The pharmacy role is essentially a 503(b) compounding pharmacy, focused on drugs that appear on the Food and Drug Administration's shortage list. Those are some unique aspects which differentiate MCCPDC from some other creative startups in the space, such as GoodRx.

For example, the MCCPDC venture is partially an online pharmacy for generic medications (it currently outsources Rx fulfillment right now to a third-party known as TruePill), but it is also a registered pharmaceutical wholesaler (such as McKesson, Cardinal Health or Cencora [which was formerly known by the cumbersome name of AmerisourceBergen]). It does all of those things internally, aiming to bypass the cost markups associated with each layer in the distribution system. MCCPDC is unique in that it cuts out the middlemen (collectively, insurance companies, PBM's, drug wholesalers, etc.) rather than relies upon those entities as most others in the prescription drug supply chain do, and can therefore offer price transparency for its customers. In particular, this differentiates MCCPDC from other entities like Amazon Pharmacy which cannot do under its current business model.

In June 2022, researchers from Harvard University published data showing that Medicare could have spent $3.6 billion less on generic drugs if they had bought the drugs from Mark Cuban Cost Plus Drug Company and insurers, including Medicare, could also benefit from the cost plus business model. In essence, the PBM business model which in recent years has been eviscerated through public research and it was further discredited by the Harvard study as well. 

However, of particular relevance is that other researchers outside of Harvard have since replicated key findings of the Harvard study, which proves it is not simply a one-off oddity designed to be used in sales pitches made to doctors (as most other pharma studies are), the Harvard finding is likely a reliable one. 

The Mark Cuban Cost Plus Drug Company business model does appear to be disruptive to the "business as usual" status quo in the pharmaceutical industry, which tends to have many entities which work tirelessly to ensure nothing ever changes (because it makes them so much money for doing practically nothing). Opaque PBM and drug wholesaler business practices are predicated upon withholding information from key stakeholders within the system, rendering the stakeholders unable to make informed decisions which directly impact what they're expected to pay. But when patients are expected to pay a portion, they are not quiet about whatever savings they achieve. Leveraging that positive word-of-mouth is a key part of the MCCPDC marketing strategy.

The Mark Cuban Cost Plus Drug Company disrupts how pharma is marketed today by simply cutting the middlemen out of the equation, and it seems to be working for many. The company has a trial underway for insulin, limited thus far to Lilly's unbranded "authorized generic" version of Humalog (see for details) which patients can buy from most any pharmacy with a coupon from Lilly at a price of $35/vial (as long as they're willing to not use their insurance to buy it). However, there is an expectation that as the half-dozen or more genuine biosimilars emerge starting in 2024, MCCPDC could switch suppliers on insulin and sell a wider spectrum of insulin products. Indeed, there is a small but growing chorus of academic researchers whose research concludes that perhaps it would be better for covered patients and employer health plan sponsors alike that generic/biosimilar/authorized generic drugs should be removed from insurance pharmacy benefits, effectively leaving PBM's to focus only on more-costly branded and "specialty" drugs (although the very designation of "specialty" drug was invented by the PBM industry, and should not be enabled IMHO). 

The argument is that patients may actually be better off bypassing insurance to buy many generic drugs. I have discovered that to be true for at least a handful of generic drugs (and yes, I did find MCCPDC offered the lowest prices on those). The PBM's now make so much on "spread pricing" on generic drugs they don't want to give that revenue-stream up, but patients can easily cut them out of the transaction completely (which is what I did). Their PBM price differences are often so glaring it is hard not to notice, and consumers are not shy when they boast about how much they saved by patronizing entities like MCCPDC to their friends, neighbors and co-workers about how much money they saved by cutting insurance out of the equation; that's self-inflicted damage that PBM's are doing to themselves, and its why USC research finds that about half the time, patients can save by simply paying cash for generic drugs

Will a Divided Congress Act on PBM's? It's Possible; But Only Time Will Tell.

Fascinatingly, on January 26, 2023, RollCall (a publication similar to Politico, except focused on what lawmakers in Congress are doing, rather than all of government) reported that (see "members of Congress may soon be turning their fire on PBM's".

The article also reported: "We want to address the whole kit and caboodle," said Georgia Republican Rep. Earl L. "Buddy" Carter of Georgia (who is formally trained as a pharmacist), referring to the full suite of PBM business practices. He said that he and other lawmakers, including a number of Democrats, plan to soon launch what will be called a bipartisan "Patient Access Caucus" to focus on issues impacting access to healthcare. "That is going to be the first issue that we address: PBM's."

Finally, the RollCall article also quoted Republican Rep. James R. Comer of Kentucky, as the new chair of the House Committee on Oversight and Accountability, who added: "We're concerned about a lot of the decisions being made by the PBM's, the lack of transparency by many of the PBM's, the vertical integration by many of the PBM's, adding the committee would have hearings soon."

Readers may recall that nearly a year earlier, on May 5, 2022, the U.S. Senate Subcommittee on Consumer Protection, Product Safety, and Data Security chaired by Democratic Senator Richard Blumenthal of Connecticut held its own hearing entitled "Ensuring Fairness and Transparency in the Market for Prescription Drugs," and that hearing, PBM's were discredited (watch a recording of that hearing at for more) and that proved very revealing to lawmakers.

Beyond that, the Washington Post reported (see for more): "Lawmakers have also called for and introduced bills aimed at prohibiting 'spread pricing' — which the PBM industry contends can be an important 'risk mitigation model' for PBM's — requiring public disclosure of the total amount of rebates which manufacturers pay to PBM's, and how much of that is then passed on to health plans (of course, many health plans towards the end of that money-tree routinely fail to pass ANY of that cash on to patients with deductibles, so lawmakers must  realize that also needs legislation). 

As noted, Mark Cuban Cost Plus Drug Company initially intended to operate as its own PBM, but the company later abandoned that plan when it signed contracts with several PBM startups which do not engage in "spread pricing". Opportunities there remain, and other PBM's which it can still do business with remain, such as the startup CapitalRx (which has a coupon-generating website/app called the CapitalRxAdvantage savings program open to anyone), although that PBM engages in selective spread pricing, maybe not on generic drugs, so the devil is in the contract details.

The Washington Post added: "Meanwhile, Republicans will 'prioritize making health-care costs and prescription drugs more affordable,' including working on actions related to PBM's, per a House Energy and Commerce spokesperson."

High-profile Congressional hearings tend to make news, but unless lawmakers actually use the info. revealed in those hearings to implement changes, nothing changes (and PBM industry trade group Pharmaceutical Care Management Association ("PCMA") knows that, and it selectively bankrolls candidates to ensure there will always be a divided Congress where nothing ever happens when it comes to PBM legislation). But, the implication seems to be that in spite of Republican's razor-thin control of the U.S. House of Representatives (they have just an 8-vote majority, which means that under parliamentary rules, committees are required to be bipartisan) there is at least potential for bipartisan action on new governance of PBM's, something the secretive industry has pretty much been able to avoid for decades. 

And, thanks to agreements Republican House Majority Leader Kevin McCarthy of California made with the House Freedom caucus, giving up some of his power as House Leader to the very chamber he supposedly controls, it remains possible the concessions Mr. McCarthy made with that particular faction of his caucus could also potentially be leveraged by other House members (such as Buddy Carter) in order to potentially force a House vote on PBM legislation, which was not necessarily something Kevin McCarthy had envisioned from the more moderate members of his own caucus. But thanks to his agreements with the holdouts who refused to vote for him as House Majority Leader, that could potentially be on the table now, and the Senate already has provisions in several bills to govern PBM's which could potentially be negotiated into law. Right now, all of that is speculation. 

U.S. House of Representatives Remains a Proverbial Wild-Card

The House remains a proverbial wild-card considering how much Speaker Kevin McCarthy had to give of his own power in order to unite a disjointed caucus to officially name him as House Speaker, and because the "red wave" never happened during the midterm elections (see for more), McCarthy's party now only has the narrowest of margins to accomplish anything, and with the Senate controlled by Democrats and a Democrat with the veto pen, little is expected of the House. Most of what the House actually does will require bipartisan agreement (and votes), so they're trying to rearrange committee members from Democratic House members whom they think they'll be able to persuade into going along with whatever the Republican majority wants on things such as intelligence, but the composition of other House committees remains unchanged. Instead, they are focused on useless hearings and studies to placate their voter base.

High-profile ejections of some House Democrats from key House (intelligence) committees have made headlines, but it's less clear how more mundane committees (such as those with potential to address healthcare and PBM reforms) might align in this new, still uncharted environment. Recall that two previous Republican House leaders ended up quitting in frustration (including both former House Speakers Paul Ryan and John Boehner), so Rep. McCarthy's leadership is by no means assured for the next two years.

House Members Who Support PBM Reform Could Use McCarthy Concessions to Advance a Vote on PBM Reform. Maybe.

On drug pricing, PBM's engaging in "spread pricing" on cheap generic drugs was previously something PBM's were formerly able to freely use for their own benefit. But with the advent of new tools, "spread pricing" used on generics is crumbling underneath the PBM's, as more patients discover how much their own insurance PBM's are ripping them off on generics. Patients are voting with their dollars. They can save a lot by paying cash at Costco, MCCPDC, Amazon and/or by using GoodRx and similar coupons, which collectively enable a new dynamic, whereby PBM's former air-tight control is eroding. Consumers aren't shy about telling other people how much they've saved by bypassing their insurance. MCCPDC marketing is done entirely on social media. 

Right now, MCCPDC sales are growing robustly. These things open sales opportunities for startups such as Mark Cuban Cost Plus Drug Company. And, the PBC mission statement plays a role here: if it disrupts pharmaceutical marketing and loses sales, MCCPDC will still be able to say: "mission accomplished". That is a new, and previously non-existent market dynamic.