Potential Cost Savings Based on the Mark Cuban Cost Plus Drug Company Model - Ruchika Talwar

March 21, 2023

Ruchika Talwar joins Sam Chang to discuss a Journal of Urology publication focusing on the Mark Cuban Cost Plus Drug Company (MCCPDC), the awareness of the scope of the availability of prescription drugs, and the possible impact it had on our patients. The MCCPDC is a public benefit corporation focused on the manufacturing and distribution of low-price generic drugs. Dr. Talwar explains the benefits of introducing the MCCPDC on Medicare savings and why urologists need to be aware of this when prescribing medications to their patients. She explains that every drug they analyzed generated significant cost savings for Medicare, ranging from 50% to 99.2% cost savings. Abiraterone was the driver behind the majority of the cost savings with a 99% potential cost saving.


Ruchika Talwar, MD, Urologic Oncology Fellow, Department of Urology, Vanderbilt University Medical Center, Nashville, TN

Sam S. Chang, M.D., M.B.A. Patricia and Rodes Hart Endowed Chair of Urologic Surgery Professor Department of Urology at Vanderbilt University Medical Center

Read the Full Video Transcript

Sam Chang: Hello, everyone. My name is Sam Chang, I'm a urologist in Nashville, Tennessee. And we are quite fortunate to have a rising superstar in not only urology, but I think she will make great strides and make a huge impact in increasing access to care in so many different ways for all our different patients. And so, I have the pleasure of introducing Ruchika Talwar. Ruchika is our current oncology fellowship at Vanderbilt, and will be joining our faculty. And she has started a significant kind of social media interest, and hopefully even beyond that, in terms of looking at different ways that we can hopefully improve access to care for all our patients. And she has an area of focus that she's recently written on that just actually got published in Journal of Urology, actually came out electronic version today. Today is January the 10th, I just saw that come out. Dr. Talwar, I'll turn it over to you. I think you've got some slides that you'd like to present, and we look forward to going over and talking about this exciting work.

Ruchika Talwar: Thank you so much, Dr. Chang. I'm so happy to be here with the UroToday audience. As you mentioned, we recently conducted an analysis that was published in Journal of Urology, exploring urological drug price stewardship, potential cost savings based on the Mark Cuban Cost Plus Drug Company model. I have no financial disclosures.

The current state of prescription drug spending in the United States is certainly not insignificant. In 2020, spending on prescription drugs amounted to over $300 billion, which was about 8.5% of the national healthcare expenditure. And in fact, more recent analyses looking at data from 2021 and 2022 suggests that now about 10% of healthcare spending is in this domain. Currently, most patients purchase prescription drugs through insurance companies as a benefit or by paying out of pocket. Depending on their insurance type and level of coverage, they endure costs sharing that can manifest in several different ways. The first is via prescription deductibles that must be met before coverage starts. Tiered copay systems essentially that charge a flat fee per prescription. Co-insurance plans that sometimes can charge a percentage per prescription. And out-of-pocket maximums that try to provide financial safety nets for patients, but don't always do a great job.

That brings me to this new, what I believe is a novel disruptor in the pharma industry. Founded in January 2022 by Mark Cuban, the MCCPDC, or Mark Cuban Cost Plus Drug Company, is a public benefit corporation focused on the manufacturing and distribution of low price generic drugs. By collaborating with Truepill pharmacy to access accredited pharmacists for prescription fulfillment, the company is able to provide transparent pricing following what's called a Cost Plus pricing strategy. What that means, is that they charge a 15% markup on the cost of manufacturing, and every prescription has a standard $3 pharmacy service fee and $5 direct to consumer shipping fee across the country. By vertically integrating and forgoing marketing spending on their drugs, they're able to sustain this Cost Plus pricing strategy, which has allowed patients to access decreased drug prices in a reliable, and I would call patient-centric manner.

There are nine drugs that are offered in Mark Cuban's Cost Plus Drug Company listed here. If you think about the burden of these drugs currently for Medicare beneficiaries and for taxpayers in general, in 2020, the US government spent about $1.6 billion on all these drugs alone. That brought us to thinking, what effect could the Cost Plus pricing model have on Medicare Part D spending for these drugs?

As you mentioned, we published our analysis in Journal of Urology, which did come out electronically today. We identified the nine most utilized oral drugs in urology by volume using the 2020 Medicare Part D spending data, and cross-referenced it with the drugs that I just showed on my last slide. For these nine drugs, we were able to identify the price that was listed on the MCCPDC website. And of note, we included all of the fees that I outlined earlier for both the minimum, which is a 30 count, and maximum, which is the 90 count quantities that were available. And then we cross-referenced the 2020 Medicare Part D spending for these drugs. We essentially were able to do rough calculations and compare the amount that the US government would've spent in Medicare Part D if Medicare followed this type of Cost Plus pricing strategy for urologic drugs.

All 30 day prescription drug prices offered by MCCPDC, except for Tamsulosin and Finasteride, generated cost savings for Medicare. In these two cases, the $5 shipping charge per 30 day prescription was actually the barrier to generating a cost savings. All the other drugs generated a cost savings of about 16%, to up to 98%. Now this figure I'm showing here is the 90-day prescription drug pricing comparison. And you can see here that every single drug we analyzed did generate significant cost savings for Medicare. The percentage of savings in this case ranged from 50% to 99.2%. And you can guess, by looking at this figure, that Abiraterone was the driver behind the majority of the cost savings here. That's where that 99% potential cost savings was noted, where you can see over $600 million were spent in Medicare Part D for this drug alone. Whereas, in the Cost Plus pricing strategy, about 6 million was spent on supplying Abiraterone to Medicare beneficiaries.

This Cost Plus model has a potential for a total of $1.2 billion of savings for Medicare Part D, if you look at the drugs that we analyzed. As I said, this was heavily driven by Abiraterone. And there's a couple other weaknesses I want to take a second to point out. First of all, we were not able to account for savings in commonly utilized drugs such as estrogen, like vaginal estrogen, specifically due to limitations in how the data described the way estrogen was administered. And the other thing to mention, specifically for Abiraterone, is that there's a lot of data out there telling us that as a drug stays on the market for a longer time, Medicare Part D costs do go down significantly.

So looking at the Abiraterone data that was just released for 2022, I do want to point out that there may be some degree less of a comparison when I'm comparing these 2020 prices with the 2022 price that's listed on MCCPDC's website. However, that's no excuse. We still should not be seeing a 99% potential cost reduction. And this analysis really focuses on ways the federal government can revolutionize the way we spend money on healthcare. But truly, the main driver for this analysis was to get the word out there that this resource exists. Patients are able to access prescription drugs at a lower cost often than if they use their insurance benefit. And we wanted to make sure that urologists were aware of this important resource. Thank you.

Sam Chang: Ruchika, that's unbelievable. I think the idea of first increasing the knowledge that this is actually available, I honestly had no idea that certain cancer drugs were actually available within the Mark Cuban plan. That was the first thing. And the second thing, obviously that struck everyone, was the differences in terms of the actual cost and pricing. In looking at that, the limitations currently are, and clarify for me. First, they do have to be generic medications, correct? Because those are the only ones that are available for this program. That's correct, is that right?

Ruchika Talwar: That is correct.

Sam Chang: Okay. Secondly, as you say that there is over time the newer medications, and Abiraterone has been more recently become a generic medication, there is somewhat a drift downward in terms of price. But on average, are we talking 5%, 10%? Not 50 or 75%, and definitely not 99%, correct?

Ruchika Talwar: Correct. Correct. It's hard to predict the exact trend, but you still won't see a 99% drop within one to two years. So it's an important resource to be aware of.

Sam Chang: And I know this wasn't looked at, but any idea for individual patients what their savings could be? Like you were saying, either following their current Medicare type of coverage versus going outside of that and actually utilizing their own out-of-pocket. Roughly, do you have any idea in terms of cost savings for an individual?

Ruchika Talwar: It really varies. Some of the drugs that are available, such as Tamsulosin, have a really minimal cost benefit. As I mentioned, if you consider the shipping costs, for a 30-day prescription there's not much cost benefit at all. But for Abiraterone alone, that 90% cost reduction that we keep referencing, that would translate to direct cost for the patients in Medicare Part D. But more importantly, also for patients who either are underinsured or uninsured, I mentioned deductibles earlier, I think that's a really important point. We keep referencing the cancer drugs. You and I are both obviously in the field of urologic oncology, but I want to make a point to talk about a lot of the other drugs in urology, which are quality of life medications. For patients who perhaps may have maybe not meeting their deductible for their cancer care, for example, I think it's really hard to say that they're going to go fill a prescription for overactive bladder, for example.

Or for women who are dealing with other cancer treatments, or other more pressing, perhaps cardiac or pulmonary or whatever life-threatening issues. It's going to be really hard to convince them that the vaginal estrogen out-of-pocket cost that they need to cover is worth it. This company really has a special role in urology for that reason. You and I talk to patients in clinic all the time about even erectile dysfunction after prostatectomy. It's hard to make a case to an insurance company that doesn't cover Cialis, for example, and only covers Viagra, that there is a legitimate reason to make that switch. Or for patients at the VA, for example, who only get a small quantity per three months of erectile dysfunction medication, they're in a tough conundrum. So arming patients with this sort of information, I can't even put a cost saving number to that, because I'm providing patients with an opportunity here to improve their quality of life in an affordable way that wasn't even an option a couple years ago.

Sam Chang: An option earlier, yeah. And then understanding that this is a single snapshot within a one-year time period. Just as you're saying, many of these medications need to be continued in perpetuity, and that only magnifies the differences in terms of cost savings and costs that could be actually no longer born by the patient. All right. This is your chance here, this is not being written down anywhere, it's not being published, chance to shake the trees a little bit. From a policy governmental standpoint, where do you want this type of work to start making inroads in terms of changes in the process that could actually be beneficial for many, many more patients?

Ruchika Talwar: That's a great question. I think that we are in a special time. Now, the Inflation Reduction Act that was just passed a few months ago now allows Medicare to negotiate prices for certain drugs, which is a new concept. I think having options like this, arms Medicare and the federal government with the ability to have leverage against pharmaceutical companies. Now, it is certainly way above my pay grade to say if Medicare is going to go to Mark Cuban and say, "Hey, we are willing to supply our drugs through your company." I think there's a couple barriers to that. However, I think still the fact that the federal government is even able to have those conversations with pharmaceutical companies is what's really changing the game here. And the other thing to mention, that we didn't really talk about, is the ability for health systems on a smaller scale to work with Mark Cuban. Or employer health plans, for example, to work with this company and try to reduce costs for the employer, but obviously also for those covered.

Sam Chang: And in all honesty, it's just like you learn that in any type of price war is not necessarily the most beneficial within an economy. But the idea that, hey, we can actually have a process like Mark Cuban's that is successful and beneficial, there's no question that would perhaps simulate others to focus in on this market, allow access to more and more patients. Where are you going next with the next research evaluation of this? Because I know there must be other areas where this could be possibly impactful in terms of, hey, if we make these changes, we could be cost savings in this type of area, or whatever. Where are you going next in terms of the research?

Ruchika Talwar: Great question. We just wrapped up an analysis of all of the cancer drugs that are available through this company. At the time of our analysis there were seven. Now, as of 2023, there are eight oral cancer agents that are available through MCCPDC. And we're doing a little bit more of a complex analysis in that we're calculating the difference between what is paid for through Medicare Part D, through generics, through brand names, and also through what's called catastrophic coverage. So if patients catastrophic coverage kicks in, in certain cases... I won't divulge the details yet because the paper is still in review. But in certain cases, even through what's supposed to be a safety net for patients, paying out of pocket through Mark Cuban's website is actually cheaper.

Sam Chang: Despite that catastrophic coverage?

Ruchika Talwar: Despite that catastrophic coverage. Solely because a lot of those drug prices, again, are driven up for multiple reasons. Obviously, I can speculate on whether it's due to the fact that it's a newer generic or it's a brand name option. Without a generic counterpart available through Medicare, there's a lot of things to consider there, but these are things that clinicians need to be aware of when they're prescribing medications.

Sam Chang: Yeah, I think that's probably... That last statement there really can be influential for some many of our patients. Because to be honest, before this research was published, before you did all this work, I personally, and I know many of us were not necessarily aware of the scope of the availability, and the possible impact it had on all our patients. Not necessarily just our Medicare patients, but all our patients in terms of the possible benefits. And I really want to emphasize your point regarding the quality of life types of medications, those that aren't necessarily "absolutely necessary". The impact on those clearly can be revolutionized or changed by having access to medications at this kind of cost. Ruchika, I really appreciate you spending some time with us, and really look forward to your future work. And really look forward to the paradigm shift that I think you're going to help lead. Thanks again for spending some time with us.

Ruchika Talwar: Thank you. Thanks so much for the opportunity to share our work. I appreciate it.