Mark Cuban Goes After Big Pharma

On paper, it’s hard to conceive of someone who is worth more than $4.5 billion being considered a challenger. It wouldn’t be the first time Mark Cuban defied convention. From his fortuitous sale of Broadcast.com for $5.7 billion in Yahoo! stock before the dot com bubble burst to his investments in the ultimate underdogs on “Shark Tank,” to unconventional draft picks that delivered one (and maybe, soon, a second) NBA Championship, few entrepreneurs have a better grasp of the challenger brand mindset than Mark Cuban. Now, he’s taking on his biggest challenge yet, going after big pharma with his new online venture the Mark Cuban Cost Plus Drug Company. It will offer more than 100 generic drugs at a fraction of the cost of their branded companion drugs. Will it work? Would you bet against Mark Cuban?

A little background.

For the better part of 40 years, Americans have voiced spirited displeasure over the cost of healthcare. We’ve all decried the exorbitant cost of prescription drugs. The economics of pharmaceuticals and their Gordian Knot with insurance companies, hospitals, doctors, lawyers, the government, and more, complicates the issue, for sure.

The drug business isn’t a cheap one to get into. To even get started, pharmaceutical companies have to invest millions to billions of dollars to develop new drugs. Then, they have to pass through a rigorous testing and approval phase to make sure the drugs are safe. Once approved by the Food and Drug Administration (FDA), companies are given a patent on their new drug, usually for 20 years. In addition, the FDA gives the company regulatory exclusivity for at least six years where no generic equivalents can be approved. Presently, the average market exclusivity time frame for newly approved drugs is more than 12 years.

If you’re the company that invested in the research to find a new drug, it’s only fair you should have time to recoup your investment. Otherwise, what’s the incentive to invest in development?

Yes, profit funds raises, bonuses, and in many cases huge salaries. But it also funds further research into new drugs – many of which never get approved. It funds speculative testing to find cures for more exclusive and elusive diseases that might otherwise never be considered. Profits fund lifesaving medication big pharma companies provide for those who can’t afford it, like seniors and the underprivileged. That’s not to say there’s isn’t room for improvement. Clearly, there is.

The pain of big business.

Sometimes in big pharma, the dark side of capitalism takes over. Consider the cases of  Martin Shkreli and the Sackler family’s overzealous marketing of OxyContin. But even when things are “normal,” there are still drugs that cost patients hundreds, even thousands of dollars a month thanks to inflation, manufacturing, insurance, and more. People are frustrated and hurting, as detailed in this example from a Forbes article last month:

“’The list price for my drug, which is a generic asthma medication, recently rose to nearly $4,000 a month and the co-pay — the portion of the drug’s cost for which I was responsible — increased to more than $1,300 a month. In addition, I was also responsible for a $480 annual deductible and a $45 monthly premium.’

Sticker shock like this is not rare. The prices of nearly 400 generic drugs increased by more than 1,000% between 2008 and 2015. And the co-pays for these drugs have risen commensurately, in some cases, exceeding the cash price of the drug itself.”

As patients, what are we to do? Or, on a bigger scale, how can the manufacturers of generic, less expensive drugs take on the category leaders who have a 12-year head start on sales, marketing, brand share and profit? You think like a challenger brand, and you find a champion.

The challenger brand mindset.

Challenger brands are all about breaking convention. Today, we call it “disruption.” Category leaders must fight battles on multiple fronts. Because of that, challenger brands willing to commit can often find chinks in the armor they can attack to gain some advantage. In the case of big pharma, the glaring point of weakness is cost. It’s that vulnerability the Mark Cuban Cost Plus Drug Company is working to exploit.

He doesn’t take insurance because that would force him to deal with manufacturers which would dictate certain pricing. Still, the lower prices make the drugs affordable and often cheaper than they would have been with insurance.

It’s not for everyone. But then, challenger brands never are.

Here’s how Cuban describes his mindset on the company’s website:

“We started Mark Cuban Cost Plus Drug Company because every American should have access to safe, affordable medicines. If you don’t have insurance or have a high deductible plan, you know that even the most basic medications can cost a fortune. Many people are spending crazy amounts of money each month just to stay healthy. No American should have to suffer, or worse, because they can’t afford basic prescription medications.

If you are fortunate enough to have health insurance with a low deductible, the high cost of drugs is driving up the premiums that you or your employer pay, making getting health insurance expensive and challenging. The Mark Cuban Cost Plus Drug Company takes these problems head-on.”

Some eye-opening numbers.

It’s one thing to hear collectively about the astronomical cost of healthcare and pharmaceuticals. It’s quite another to see the real numbers when you compare branded drugs and their generic equivalents. Here are just five of the more than 100 generic drugs Cuban sells through his new online pharmacy:

Imatinib (Generic for Gleevec – a breakthrough cancer drug for leukemia)
Gleevec Retail Price: $2,502.50
Cuban’s Generic Price: $14.40

Albendazole (Generic for Albenza – used to treat tapeworms, roundworms, hookworms, and pinworms)
Albenza Retail Price: $437.698
Cuban’s Generic Price: $33.00

Mesalamine (Generic for Canasa – an anti-inflammatory drug used to prevent flare-ups of ulcerative colitis)
Canasa Retail Price: $940.24
Cuban’s Generic Price: $32.40

Lisinopril (Generic for Prinivil – an ACE inhibitor to treat high blood pressure and heart failure)
Prinivil Retail Price: $24.00
Cuban’s Generic Price: $3.60

Fluoxetine (Generic for Prozac – an SSRI used to treat depression, OCD, panic disorders and others)
Prozac Retail Price: $22.94
Cuban’s Generic Price: $3.90

Challenger brands can change the world.

Whether intentional or not, Cuban has tapped into one of the fundamental concepts in the Conscious Capitalism movement – the idea of “doing well by doing good.” It’s a mindset that can be a powerful catalyst for challenger brands looking for a way to compete against seemingly insurmountable odds. For 250 years, American capitalists have wrestled with the question, “how much is enough?” And while entrepreneurs and those in the C-suite continue to ponder that, for more and more companies it’s now not the only question in the discussion.

For Mark Cuban, one of the most astute entrepreneurs in the country, 15 percent is a fair number. 15 percent allows him to earn enough profit to compensate his team, expand the company, hire new people, add new drugs, and market his company. All while giving patients without the means to pay exorbitant drug prices the medicine they need to manage chronic illness and in many cases survive.

Challenger brands find a way where there is no way. Challenger brands know who they are and who they are for. They lean into undeniable truths, like, no person in a country like America should suffer and be sick because they can’t afford their medicine. And they create a lighthouse identity that sends out a beacon so bright people see it even when they’re not looking for it. Mark Cuban is shining that beacon on predatory drug pricing and lighting the way toward a better alternative. He’s proving yet again that the underdog can win. This time, in a really meaningful way.

MIKE SULLIVAN is president and CEO at LOOMIS, the country’s leading challenger brand advertising agency and a top Dallas advertising agency for digital, social, mobile and user experience. For more about challenger branding, advertising, and marketing, leadership, culture, and other inspirations that will drive your success, visit our blog BARK! The Voice of the Underdog and catch up on all of our posts.

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