This vial of insulin costs just $6 to manufacture.
At this pharmacy in Windsor, Ontario, it can be purchased for $32. Twenty minutes away, in Detroit, the same exact vial costs $340.
It is time for a government that works for the American people, not drug companies' profits. pic.twitter.com/Uo2T8GG54T
— Bernie Sanders (@BernieSanders) July 28, 2019
Bernie Sanders’s presidential campaign involved many issues, but one of his strongest was Medicare for All and the outrageous price-gouging involved in medical care. Although medication costs were not an issue for me personally at the time, it is an issue near and dear to my heart because of the many, many people I know who do require daily medications. And of course, the disabled are the minority group that everyone has the ability to join. All this to say, that I care deeply about medical access for every person, regardless of economic status.
There have been any number of attempts to fix the broken American medical system from within. A commonly used work-around for medications that aren’t covered by insurance, that are still too expensive with insurance, or for those without coverage is the app Goodrx. This app offers discounts on medications that would have to be paid out of pocket — but the prices are location dependent. If Tucson, AZ carries your medication for $5 on Monday, but you live in LA, you cannot access that $5 rate. So each person has a very different experience using Goodrx from town to town and from day to day. But a new contender has entered the ring!
Cost Plus Drugs is a brand new website founded by Dr Alexander Oshmyansky and funded by Mark Cuban, the billionaire owner of the Dallas Mavericks who also has the notoreity of being the richest shark on Shark Tank. Cost Plus Drugs is a new extension of Cuban’s support for Dr Oshmyansky’s medical projeccts, which include almost two decades of research to prevent hospital-caused infectious diseases (Altitude Medical), four years of pharmaceutical supply (Osh Affordable Pharmaceuticals), and the Pharmacy Benefit Manager (PBM) branch of Cost Plus which launched last year. The company is also building a compounding pharmacy in Texas which is expected to open later this year, and have applied for a biologics license with the FDA. Dr Oshmyansky is apparently serious about his desire to use medicine to help people — and if he happens to make a ton of money with his start-ups, well that is a lovely, lovely perk.
How the company works is quite simple: if Cost Plus offers one of your medications, your own doctor sends a script to the company and you get your medicines at extremely low prices. The company has a stated 15% mark-up as well as small administrative/stocking fees, but as it doesn’t work through the insurance system, there are no bizarre hurdles to jump nor price imbalances. All patients get the same rates, which are based off of the cost of sourcing the medicines. Currently, Cost Plus works with third-party manufacturers for generics of the most commonly needed medicines. Because no, they don’t offer all meds, not even close. The company is only offering around 100 different medications at this time, but the goal is to keep expanding so as to provide alternatives for more diseases and more medications. But how good are these prices? Going by Cost Plus’s website, the savings are significant — often in the multiple hundred or even thousands of savings per refill. For example, Albendazole (an Albenza generic for parasitic worm infestations) costs $453 per fill, with a discount of $6112.28 due to the drug’s outrageous price of $6565.28. But that’s the price against the out-of-pocket, no-insurance price. Someone who has a Goodrx account and has more experience sourcing medications broke down a few examples of the math most users are likely to see:
If you don’t have insurance, Goodrx is often about as good as it gets, so I’m using their prices for my comparison.
Please note that prices are location dependent on Goodrx — it shows you the options at pharmacies near your location. I’m in Pittsburgh, PA; if you’re in a different part of the country and you try this, you may get slightly (or wildly) different numbers.
Fluoxetine is generic Prozac. Thirty 20mg capsules costs $12.80 at my cheapest local pharmacy. Cost Plus has it for $3.90.
Atorvastatin is generic Lipitor. Thirty 40mg tablets is $10.95 at my cheapest local pharmacy. Cost Plus has it for $4.20.
Omeprazole is generic Prilosec. Thirty 20mg capsules is $13.90 at the cheapest local pharmacy; $4.20 at Cost Plus.
Aripiprazole is generic Abilify. Thirty 10mg tablets is $17.73 at the cheapest local pharmacy (and $260.60 at the most expensive — and that’s with a discount, still, yikes); $6.00 at Cost Plus.
Lamotrigine XR is generic Lamictal XR. Thirty 25mg tablets is $36.59 at the cheapest local pharmacy; $8.40 at Cost Plus.
Maybe that doesn’t seem like a huge discount, but the Goodrx prices change *all the time* — last time I used it to buy Fluoxetine, which was in the last couple of years, it was $31. Also, many people are on multiple medications, or have multiple people in a household taking multiple medications, and $5 off every prescription adds up real fast.
I am also incredibly interested to see how the company will move forward after the manufacturing facility is completed. Compounding pharmacies are incredibly important for any number of reasons, not in the least being that they can control what allergens go into someone’s medications. This is doubly concerning since as of 2020 the FDA has allowed unlabeled substitutions for food manufacturers (and medicines) for “the entire COVID emergency,” however long that is. As Abe discovered while we were in Scotland, one of the most common non-active ingredients for medications is lactose. According to one study, almost half of the medications represented contained lactose. With even less control over what non-active ingredients are included in medications thanks to the current FDA statute, many people could experience allergic reactions from their medications. Opening the option for customizing meds around a patient’s specific allergens, as is possible with a compounding pharmacy, could be life saving for any number of people.
When looking into this company, I was bemused to see a number of articles that were extremely negative about it. To be clear, I think there are causes for skepticism. For one thing, they still only carry drugs for treating type 2 diabetes, leaving those with type 1 on their own. I also certainly have worries about billionaires wanting to ‘fix’ the medical situation in the US (Cuban almost certainly has intentions to run for president and this would be an extremely popular thing to have in his back pocket), my concerns are, mysteriously, different from those of Forbes, or other financial reporting groups. One of the biggest concerns for Forbes was the lack of insurance — paying out of pocket for medications doesn’t lower deductibles for non-Cost Plus medications from shitty insurance plans. This is an issue that I consider one to watch, but as Cost Plus adds more medications and we continue to work to dismantle the current insurance system, this will hopefully become an issue of the past.
Tegan has helped with beta reading and editing on this blog for a while now, and she decided she also wants to do a weekly post about topics that catch her attention. As always this is part of our effort to make ends meet, as my immigration status doesn’t allow me to get wage labor, so this blog is my only source of income. You can sign up to help us pay the bills at patreon.com/oceanoxia. The great thing about crowdfunding is how little each contributor needs to put in; in this case as little as a dollar per month – that’s like three cents a day! Pocket change! We could use it to buy better boots!
I feel I’ve seen this before. In the 80s, or was it the 90s, there was a great lamentation over rising drug prices. A short series of very wealthy people rode up on white horses and declared ‘they would save the lowly consumer’.
Some manufacturing plants were built at the cost of hundreds of millions of dollars. These plants started producing. A few were shut down because, low and behold, making drugs is slightly more exacting than manufacturing shovels. who knew? Gee … you have to hire trained and specially skilled staff, and experts to watch and check on the staff, and everything is so expensive, and one tiny little mistake and you have to toss out months of work, and it all has to be so very clean, and … Some just gave up. A few were shut down by the FDA. But a happy few got the hang of producing usable drugs and these generics started to show up on pharmacy shelves and the OTC market.
Then there was a knock at the door. Guys is suits with billion dollar offers in hand want to buy your little drug company. It took a few years but almost all of those generic drug companies were sold or shut down. Most sold to one of the existing drug companies, but sometimes to investment firms heavily invested in the existing drug companies.
The numbers worked like this:
You spend 100M to start your generic drug company.
It takes a couple years to demonstrate that you can make drugs.
Major drug companies, enjoying quasi-monopoly and rolling in dough, see these upstarts as threats to their Trillion dollar systematic fleecing of the public.
These major drug companies make billion dollar bids for these small producers.
The founders of these small drug companies are offered a thousand times their investment. They grab the money and retire to a life of sun and decadence.
The small plant is closed.
Drug prices are raised to cover the cost of buying the competitor and continued increased profits (You weren’t expecting prices to go down were you?) are used to buy senators. Senators who then propose laws making it harder to open small drug manufacturing plants.
Next time around it will cost $150M instead of $100M.
So it goes.
Abe Drayton says
It will be interesting to see what happens. Out of all the billionaires whose names I know, Mark Cuban is the one who seems the most likely to do something like this for real, because he wants to save capitalism, and can see that the system will eat itself without making deliberate provision for the working class.
But yeah – suspicion is warranted.