Back to Blog

What Cost Plus Really Means for Americans’ Pharmacy Benefits


Recently, the White House held a listening session to discuss prescription drug prices and the role pharmacy benefit managers (PBMs) play in the drug supply chain. Among others, the event featured new entrants into the marketplace, most notably Cost Plus Drugs’ founder Mark Cuban. Cuban claimed that his pharmacy benefit model would reshape the industry through their product, “trust” and “transparency.”

New and innovative models in the prescription drug market are important and valuable. They increase competition in the drug supply chain, and pressure Big Pharma to lower list prices. The value of PBMs to bring down the cost of generic medications in this way has been long-established.

However, some of the claims made by Cost Plus’ co-founder, Mark Cuban, just don’t add up. Claims that PBMs offer “zero transparency” aren’t based in any fact; major PBMs have long had audit rights baked into their contracts and offer their clients both insight and control over how their pharmacy benefits are structured. Other claims that PBMs hurt independent pharmacies are also far from the truth; PBMs rely on independent pharmacies to ensure their pharmacy networks offer Americans the coverage they need – and the number of independent pharmacies nationwide is holding steady – more locations than any single retail chain could provide alone.

And comparing Cost Plus to a traditional PBM isn’t an apples-to-apples comparison. Patients can obtain some lower-priced drugs from Cost Plus, and the deals that Cost Plus negotiates contribute to industry-wide competition for the lowest cost. But while Cost Plus sees dispensing the drug as the last stop for its customers, traditional PBMs see that as just the start of how they help provide and coordinate care for members.

In part, that’s because Cost Plus only offers a fraction of the services that traditional PBMs offer. Cost Plus touts low prices on a few drugs – but they only offer roughly 2,500 prescription drugs for sale. But more than 60,000 prescription drugs are currently available in the United States.

That’s just one way that Cost Plus falls short of the full range of services PBMs provide. Through clinical insights and deep expertise, traditional PBMs help provide peace of mind for their clients and members other ways:

  • PBMs help prevent 1 billion medication errors
  • PBMs remove any pricing uncertainty, especially for employers and small businesses
  • PBMs provide union households with stable, comprehensive health insurance and prescription drug coverage

Through these services, and in addition to negotiating lower prices for drugs, traditional PBMs use their combined bargaining power to generate savings across the entire drug supply chain. Every year, that adds up:

  • PBMs deliver $1,040 in savings per person to patients and taxpayers.
  • PBMs leverage negotiating power for millions of members to secure discounts from drug manufacturers.
  • Offer patients the option of more affordable medications like generic and biosimilars, lowering costs on a larger scale.

The comprehensive approach that PBMs provide is important to the stability and affordability of employer and union sponsored health care coverage. Pharmacies can provide low-cost drugs in some cases. PBMs provide that in addition to coordinating those drugs with a patient’s medical care, ensuring coverage is integrated with a patient’s medical benefit, or structuring benefits to ensure members can get the medications they need at low- or no-cost – all of which reduce costs for patients and plan sponsors.

The PBM industry is dynamic, and new competitors are entering and growing all the time. New players in the marketplace are a good thing for consumers. But PBMs do more than just provide members with lower-cost generics; they maintain stability and safety across the prescription drug supply chain – all of which benefit consumers.