Drug prices in the USA are at an all-time high. Basic drugs that mean the difference between life and death are priced to the degree that many people with serious diseases live paycheck-to-paycheck, with recent studies finding that insulin is currently priced 8 times higher than other nations.
Despite attempts to change and reform the American pharmaceutical industry, patients have seen very little difference.
Hoping to combat the dire situation, billionaire Mark Cuban’s new pharmaceutical company Cost Plus Drug Company will be taking generic (and unnecessarily expensive) drugs and retailing them at a drastically lower price.
The company promises to be "radically transparent", providing "low cost versions of high cost generic drugs" whilst releasing the full extent of their manufacturing costs, logistics, and profit margins to consumers.
Some may call this simply undercutting the competition – fighting capitalism with capitalism. However, Cuban believes that the current state of drug pricing is a moral failing.
“I’m all for capitalism at its purest, but it requires capitalists acting like human beings first,” he wrote to Stat in an interview.
“If they don’t, the cost of health care goes up for everyone to the point where we can’t afford insurance and people die or receive inadequate care.”
Cost Plus Drug Company will roll out its first product – the antiparasitic drug Albendazole – this year, with over 100 extra products expected throughout 2021. In the case study of Albendazole on the website, the company claims that it is currently sold for $225 per tablet, preventing systemic outbreaks of hookworm from being effectively managed. Instead, Cost Plus Drug Company will be selling at $20 per tablet, making a much smaller 15% profit margin per tablet.
Looking online for Albendazole finds its lowest US retail price is $120.80, which compared to the ~€1.12 per pill fee found throughout the EU, demonstrates the price gouging that affects so many. Bringing prices in line with other nations would certainly shake up the market.
Price gouging in the drug industry has been thrust into the public eye in recent years, with high profile cases such as Martin Shkreli drawing large media attention. In 2015, Shkreli was highly criticized after raising the price of the antiparasitic drug Daraprim from $13.50 to $750. Such price hikes are not drastically uncommon, with many companies making profit margins greater than in any other industry.
Some argue the prices are justified, driving innovation through dreams of unprecedented profit. Drug development takes years, with many taking around 15 years’ worth of development, clinical trials, and approval procedures. It is therefore understandable that this research and development must be paid off, but with far lower margins seen in almost every other nation on the globe, Cuban’s company may be the competition the industry needs.