What do you mean by that?
Because your insurance company, whoever it is, uses a PBM, a pharmacy benefit manager. The PBM has negotiated with a pharmacy what the reimbursement rate is. Except they basically said, “This is what we’re going to reimburse you.”Your Apple Watch vibrates.)
You can go ahead and check it out.
He’s my son. (Sstaring at the clock.) We’ll have a late lunch. Don’t worry. Go ahead and have fun. (Let’s get back to the interview.) He is playing basketball.
Nice.
So with PBMs, there’s no negotiation. Particularly for small independent pharmacies, they take it or leave it. And, “Oh, by the way, you’re not allowed to say anything about this contract at all.” Period. Rule number one of healthcare contracts is that you don’t talk about healthcare contracts. So instead of breaking even, the pharmacy could lose $20 to $30 on every brand-name subscription they’re doing. The idea is that they’ll make it up to you with toilet paper and other stuff. Well, that doesn’t work.
And the manufacturer of the drug?
PBMs also negotiate with manufacturers, but they also lose out. They have no idea who is using their drugs, what the demographics are, what the adherence is. So the PBM will offer to do analysis for them and then sell The manufacturer has access to data on its own medicine.
So the PBM trade association says, “Look at the bad guys!” It’s very complicated and opaque.
(Greg Lopes, a spokesman for the Pharmaceutical Care Management Association, a trade group, told WIRED: “PBMs have a proven track record of delivering prescription drug savings to patients.” He added that drug companies “are solely responsible for setting and raising prescription drug prices.”)
Okay, so you saw how these entities bought up drugs and controlled the market. Why didn’t you, a billionaire, take that approach with other drugs? Why didn’t you say, “I’m going to buy all of America’s insulin”?
Well, we looked at making insulin. We developed our own insulin glargine (synthetic) and I spent $5 million or more, I don’t even know. But that was right around the time Biden made sure Medicare plans covered insulin with a co-pay of up to $35. So it didn’t make sense to do it at that time.
You told Texas Monthly that you didn’t care if you didn’t make a fortune out of this. Is that still true?
I want it to be self-sufficient. I don’t want to subsidize it all the time, but I don’t need to make money.
Do you consider Cost Plus Drugs to be an altruistic company?
No. I see it as something fun with a big impact. Altruism is like saying, “Great, I feel good because I’m helping people. I donated money and da-da-da-da-da.” Disrupting an industry that everyone hates, that’s it. fun. I get emails and letters, if not every week, every other week, that say, “Oh my God, my grandmother is alive.” I just got a note from someone who wrote, “You saved me $15,000 a year on my cancer medication. I would be dead if it weren’t for you.”
Photography: Michelle Groskopf
The interesting thing is that (and I’m not going to say midlife crisis) at least it seems like you’re thinking about your legacy now.
But if I were 25 years old and this opportunity came up…
