Alternative Models
Sonya Collins
Cost Plus has been operating online since 2022. Last year, Mark Cuban’s online Cost Plus Drug Company launched its Team Cuban card and Affiliate Pharmacy Network. Now it offers a transparent cost-plus pricing model to in-person patients who present a Team Cuban card at one of its in-network brick-and-mortar community pharmacies, which include chains, such as Kroger and Albertsons, as well as certain independent community pharmacies.
“There’s a need to have a footprint in the community because some people just want to go pick up their meds, or they have meds that are urgent,” said Robert Popovian, PharmD, health economist.
Patients who prefer to pick up their prescriptions from a pharmacy but who may get a better price through Cost Plus can have the prescription filled at a participating pharmacy and present their card when they pick it up.
The network offers patients lower prices on medications without requiring them to give up their local pharmacy. It offers often-struggling pharmacies a means of bringing in new patients and collecting a higher dispensing fee on a subset of the prescriptions they fill.
The cost-plus model
Pricing at affiliate pharmacies works like this: using this model, the patient pays the drug acquisition cost plus a 15% markup plus a $12 baseline dispensing fee for the pharmacy plus $1 processing fee at the point-of-sale.
At an affiliate pharmacy, for example, the patient would pay $13.65 for a 30-capsule supply of 20 mg of fluoxetine HCL. That’s $0.57 (acquisition cost) + $0.08 (15% markup) + $12 (dispensing fee) +$1 (processing fee).
The baseline dispensing fee paid to community pharmacies in the affiliate network is $12. The dispensing fee for cold-chain and sophisticated REMS is $14. Should Cost Plus offer controlled substances in the future, dispensing fees will be higher for those as well, a spokesperson for the company said.
Affiliate pharmacies have a choice as to where they purchase medications for Cost Plus patients. The pharmacist can choose to purchase fluoxetine HCL, for example, directly from the Cost Plus Drugs Marketplace at the drug acquisition cost or through a different source. If the pharmacy obtains the medication at a lower price from another source, the pharmacy keeps the savings.
“You’re making at least the dispensing fee, more if you can find the drug cheaper somewhere else,” said Tara Schneider, PharmD, who owns and operates Middletown Pharmacy and Wellness in Louisville, KY. “By comparison, when I fill a 30-day supply of pantoprazole, I net $1.38 from United Healthcare.”
The pharmacy is also free to dispense drugs purchased from the Cost Plus Marketplace to any of its patients, not only those who present a Team Cuban card.
Impact on pharmacy
Since the advent of mail-order pharmacy, some pharmacies have expressed concerns that the model would crush their business, but these concerns haven’t been borne out in the market.
In 2021, mail-order pharmacies filled less than 10% of U.S. prescriptions, according to McKinsey & Company. That same year, a survey conducted by the National Community Pharmacists Association found that a staggering 85% of respondents prefer getting prescriptions from a brick-and-mortar pharmacy rather than by mail.
Pharmacists may fear mail-order giants such as Amazon and others, Popovian said, due to “an underappreciation by the health care community that patients want to have their interactions with health care professionals when they’re ill, and at a pharmacy, you can easily walk in and see a health care professional.”
When Schneider looked into joining up with Cost Plus, she found that her pharmacy would be the first one in the area in the network. Then she learned that Cost Plus will offer an employee benefit in the near future.
“We are hoping that we get a lot of new patients because this is their drug benefit, and we are in network,” she said.
The impact on her business is yet to be seen, she said, as her pharmacy became an affiliate on September 1, 2024.
Popovian suspects the impact on community pharmacies will be a net positive one.
“Is this going to be the nail in the coffin of independents? I don’t think so,” he said. “The current model with the PBMs is what’s putting them out of business. This cost-plus model, I think it’s going to save independents if they play it right. They need to embrace it.” ■