Mark Cuban: Employers unknowingly profit from sick workers' drug costs
Mark Cuban says many employers are unknowingly taking rebate money for drugs funded by the sickest workers.
period ForbesSpeaking at a health care summit in New York City last week, Cuban noted that Americans often pay full list price during deductible periods, effectively subsidizing rebates that flow back to pharmacy benefit managers and employers. He believes most CEOs don't fully understand this dynamic.
Cuban pointed to a common scenario: Employees enrolled in high-deductible health plans receive prescriptions for brand-name drugs like Eliquis, which retails for about $600 a month. Until employees meet their deductible, they must pay the full list price—even if the PBM has negotiated a significant discount on the drug.
Rebates can run into hundreds of dollars per prescription, but never make it back to the patient who paid the bill. Instead, the money goes through the PBM and is eventually returned to the employer, Cuban explained.
To him, this structure completely subverts the intent of the rebate. Instead of ultimately lowering costs for people who need the drugs, the system uses these patients' high out-of-pocket costs to generate rebate checks that benefit their employers. Cuban warned that by profiting from kickbacks offered to sick workers, companies may be failing to meet their obligations under the Employee Retirement Income Security Act to act in the best interests of their employees.
He highlighted the model of purchasing medicines directly from employers as one way to avoid this problem.
His company, Cost Plus Drugs, is developing direct-to-employer drug plans designed to bypass PBMs and ensure net pricing. That way, Cuban said, employees won't be using their own medical expenses to subsidize the rebates.
“I sat down with the CEO and I said, 'Look, you're being cheated by your PBM. I know it's hard to change, but there are more and more direct-to-employer plans being created,'” he commented.
One of the partners in Cost Plus Drug's direct-to-employer drug pricing model is CenterWell, Humana's healthcare services brand.
Humana CEO James Rechtin noted that CenterWell wanted to streamline its drug supply chain to deliver drugs more efficiently and transparently. The company is contracting more directly with manufacturers so that consumers and employers can see the true net cost of drugs and avoid the middle layers that drive up prices.
“With pharmacies, we basically looked at the traditional model and said, 'We're not getting the cost efficiencies and affordability that we need to make sure our members can get their medications,'” he said.
Reichting and Cuban agreed that workers could save billions of dollars in out-of-pocket costs if efforts to eliminate middlemen continue to expand.
Photo: mathisworks, Getty Images
