Mark Cuban Critiques FTC PBM Settlements on LinkedIn

In a recent LinkedIn post, Mark Cuban expressed skepticism regarding the effectiveness of recent Federal Trade Commission (FTC) settlements with Pharmacy Benefit Managers (PBMs), arguing that they fall short of addressing the core issues within the drug pricing system. Cuban, known for his direct approach to business and healthcare, shared his initial reaction, labeling the settlements as “meh” and questioning their ability to achieve their intended goals.

Cuban’s Core Criticisms of the Settlements

Mark Cuban’s primary concern centers on the potential for PBMs to circumvent the spirit of the settlements. He points out that if employers are convinced to stick with their current PBM arrangements, the PBMs can continue their established practices, negating any potential benefits of the settlements. “If the PBM convinces the employer to choose the current system, then they can do it just the way they always have,” Cuban wrote.

He further elaborated on the detrimental impact on independent pharmacies. According to Cuban, the settlements do not adequately address the practice of Point-of-Sale (POS) rebates, which he describes as a “FU to indie pharmacies.” These pharmacies, he explains, purchase drugs at Wholesale Acquisition Cost (WAC) minus a certain percentage and then face lengthy, indeterminate waits for reimbursement, creating significant cash flow problems.

“Of course, if the sponsor overpays, they do that with out the ability to collect what they overpaid.”

Cuban also highlighted the ongoing issues of clawbacks and the use of float by PBMs. He argues that PBMs can still collect rebates and hold onto them, potentially profiting from the float while the net price to the consumer may appear unchanged. “And there are no ends to clawbacks of any kind, nor of using float. They can collect rebates and hold them for ??? to collect the float. which will be part of the game,” Cuban stated.

The Inflated Economic Foundation of Brand Drugs

A significant point of contention for Mark Cuban is the continued practice of wholesalers purchasing brand drugs from manufacturers at WAC pricing. He believes this practice inflates the entire economic structure of brand drug pricing. Cuban proposes a radical shift in this model.

“IMO, the worst of all, wholesalers still buy from brand mfg at WAC pricing. Which means the entire economic foundation of brand drug pricing is inflated.”

Cuban suggests that requiring wholesalers to operate on net pricing would fundamentally alter the landscape. If rebates could no longer be added back into the equation, and out-of-pocket costs for patients were based on net prices, it would become much easier to identify and track where significant overcharges are occurring for patients, pharmacies, and sponsors. “If you require wholesalers to work at net, then rebates can’t be added back in, cash out of pocket for everyone is at net, and it’s a lot easier to find and track where the big insurance companies are ripping off patients, pharmacies and sponsors,” he argued.

Lingering Concerns About Transparency and Influence

Beyond the direct financial mechanisms, Cuban also raised concerns about continued confidentiality clauses and the potential for undue influence from consultants and brokers. He questioned whether there would be any accountability for these intermediaries.

“would anyone be shocked if consultants and brokers got bonuses for using last year’s contracts ?”

The implication is that these clauses and potential incentives could further obscure the true costs and complicate efforts to achieve genuine transparency and fairness in the pharmaceutical supply chain. Cuban concluded his post by noting that sponsors and pharmacies would likely still be bound by confidentiality agreements, further hindering oversight.