Amazons RxPass and Mark Cubans Cost Plus Drug Company arent

Amazon’s RxPass and Mark Cuban’s Cost Plus Drug Company aren’t as revolutionary for buying cheap generic drugs as it might seem. – slate

Earlier this week, Amazon launched RxPass, a prescription drug service that costs Prime members $5 a month for as many eligible generic drugs as they need. The announcement follows the unveiling last January of another novel prescribing initiative, the Cost Plus Drug Company, an online pharmacy developed by billionaire entrepreneur Mark Cuban. By eliminating middlemen, Cuban promises to offer many generic drugs at a fraction of the cost that other pharmacies charge. Both efforts pull health insurance out of the equation, making the prescription-buying process feel a bit more like buying paper towels.

With the average American spending about $1,300 a year on prescription drugs, more than people in any other country, and millions of Americans being underinsured, the announcements have sparked significant interest. Given that this is Mark Cuban, Shark Tank’s larger-than-life investor, and Amazon, the society-changing guilt addiction, it’s natural to expect both efforts to disrupt and yield results.

I reached out to a couple of drug pricing specialists to see what they think. Most were quite petulant about how revolutionary either project is. Here’s a look at why that is, how it’s possible for Cuban and Amazon to still make millions while charging so little, and some guides on how to actually find the cheapest generics.

Let’s start with Amazon. The company has had an online pharmacy for more than two years. What’s unique about this new offering is that you can get all the generic prescriptions you need for a flat fee. Get your lisinopril, a commonly prescribed drug for high blood pressure; your estradiol, an estrogen hormone medication; and bupropion to treat depression, the generic version of Wellbutrin, for only $5, shipping included! To participate, you must first have an Amazon Prime account, which currently costs $139 per year. However, considering that more than 200 million people are already Prime members, this seems enormous.

It’s not, said Karen Van Nuys, the executive director of the Value of Life Sciences Innovation Program at the USC Schaeffer Center for Health Policy & Economics, who called the announcement “less exciting than it might have been.” Many generic drugs cost just pennies a pill, said Van Nuys, who published a revealing report on generic drug prices last year. Also, Amazon’s list only includes about 50 generic drugs. So she thinks $5 for 30 days isn’t that impressive. While you’ll never go over $5, someone taking multiple medications is unlikely to find all of them covered. Others noted that while it’s helpful to focus on generic drugs — since they account for the majority of prescriptions — the most expensive drugs are often brand-name drugs. The pass is also closed to customers in a handful of states, including California, and those on Medicare and Medicaid.

Still, it’s no secret why this is a smart move for Amazon. First, because most of the generic drugs they offer are so cheap — and they already have a shipping infrastructure in place — they probably won’t have a hard time breaking even. And as soon as they start delivering medicines in a few hours, this will further increase their attractiveness. “Amazon’s ultimate goal is probably to become the king of online pharmacies, replacing many retail in-person pharmacies over time,” said John Lu, a health economist who is the director of UCLA’s Pharmaceutical Economics and Policy Seminar is, by email. He offered helpful context that the average retail cost of a generic drug is between $20 and $30.

Now let’s look at Mark Cuban’s efforts. Cuba’s CostPlus Drug Company offers hundreds of generic drugs. The pitch is that Cuban deals directly with wholesalers, bypassing price-pushing middlemen. Then, in an unusually transparent move, he increases all prices by just 15 percent, tacks on a $3 pharmacy fee and a $5 shipping fee. Unlike Amazon, there are no major restrictions on who can use it and no membership is required. Let’s revisit the same drugs from earlier:

• Lisinopril: Starting at $8.60 for 30 pills from Cuban including shipping.

• Estradiol: Starting at $10.10 including shipping.

• Bupropion: Starting at $9.80 including shipping.

Where Cuban really excels is in a lot of the drugs that aren’t offered through Amazon. One example that Cuban is fond of touting is imatinib, a generic drug used to treat leukemia. He charges around $47 per month, while other retailers charge $9,657, he explained in a press release last year.

Still, this might overstate the novelty of what it offers. Craig Garthwaite, a professor who studies pricing and innovation in the biopharmaceutical sector at Northwestern University’s Kellogg School of Management, noted that there have long been cheaper options if you know where to look.

Since Imatinib features in many news articles about CostPlus, let’s take 60 100mg tablets as an example:

• Manufacturing costs according to the CostPlus website: $19.80

• Cost to purchase from CostPlus: $25.80 plus $5 shipping, ie $30.80

• Costco: around $130

• GeniusRx: $120.

• GoodRx’s recipe comparison tool (very useful for comparing options!) shows this while CVS charges $10,624 and RiteAid fees $5,460you can also get a coupon to reduce it $547 at CVS and $51 at RiteAid.

• Amazon and Walmart: not available.

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  • Yes, Cuban beats them all. And even if the coupons came closer to Cuban’s prices, there are many reasons why forcing people to use coupon experts isn’t the best way to counter inflated drug costs. But the savings aren’t quite as dramatic as some of the scope of his endeavors would make it out to be. Still, his project, along with Amazon’s, offers an important reminder: generic drug prices are far from universally uniform, and that’s why we should be looking around.

    They also offer a second lesson: insurance isn’t always as helpful as many of us assume. Both Amazon and Cuban offer these excellent prices without insurance. How is that possible?! Mainly because “generic drugs are often used by intermediaries who make significant profits at the expense of patients and the companies that make the drugs,” said Allen Goldberg, a spokesman for the Association for Accessible Medicines, a trade organization that represents manufacturers and distributors of generics represents prescription drugs. Sometimes that means that despite your best efforts to dig up your insurance card number, you’d end up paying the same amount without it.

    Occasionally, as USC’s Van Nuys has noted, that means you’d pay more. Yes more! The good news for the uninsured and underinsured: if a generic is available, you can avoid potential cost disadvantages if you purchase it carefully.