What do you mean?
Because your insurance company, whoever it is, uses a PBM, a pharmacy benefit manager. The PBM negotiated with the pharmacy about what the reimbursement rate was. But they basically said, “This is how much we’re going to reimburse you.” [His Apple Watch buzzes.]
You can check it out.
This is my son. [Speaking into watch.] We’ll have a overdue lunch. Don’t worry about it. Go and have fun. [Back to the interview.] He plays basketball.
Pretty.
So there’s no negotiation with the PBMs. Especially with the diminutive independent pharmacies, they either take it or they leave it. And, “Oh, by the way, you’re not allowed to talk about this contract.” Period. The number one rule of health care contracts is you don’t talk about health care contracts. So instead of breaking even, the pharmacy could lose $20 to $30 on every brand subscription that they do. The idea is that they’ll make up for it in toilet paper and other things. Well, it doesn’t work.
And the drug manufacturer?
PBMs also negotiate with manufacturers, but they lose out. They have no idea who is using their drugs, what the demographics are, what the compliance is. So the PBM will offer to do the analysis and then sell manufacturer’s access to data relating to its own medicine.
Then the PBM trade association says, “Look at these bad guys!” It’s so convoluted and confusing.
[Greg Lopes, a spokesperson for the Pharmaceutical Care Management Association, a trade group, told WIRED, “PBMs have a proven track record of securing savings on prescription drugs for patients.” He added that drug companies “are solely responsible for setting and raising prescription drug prices.”]
OK, so you saw how these entities were buying drugs and controlling 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 the insulin in America?
Well, we looked at insulin production. We developed our own glargine [synthetic] insulin, 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 up to a $35 co-pay. So it didn’t make sense at that point.
You told Texas Monthly you didn’t care if you made a fortune. 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 have to make money.
Do you think Cost Plus Drugs is altruistic?
No. I think it’s great fun and has a huge impact. Altruism is like, “Great, I feel good because I’m helping people. I gave money and so-so-so-so-so-so“Taking down an industry that everyone hates is game. 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 message from someone who said, “You saved me $15,000 a year in cancer drugs. If it wasn’t for you, I would have died.”
Photographer: Michelle Groskopf
What’s engaging – and I don’t mean midlife crisis – is that you seem to be thinking about your legacy at least now.
But if I were 25 and the opportunity arose…