Mark Cuban. Photo courtesy of Shark Tank via Twitter.

So you’ve heard about the latest investment from Preston Hollow neighbor Mark Cuban: a pharmacy. It’s been all over the news and some folks are calling him a hero. But how does the pharmacy work?

Cost Plus Drugs is simple: users search through the site to find their medication online, ask their doctor to send a prescription for that medication to a Cost Plus Drugs pharmacy partner, and then the medication can be delivered to them. What makes this online pharmacy different, however, is transparency.

When users select the medication they need, a retail price and current price on Cost Plus Drugs for a 30-day supply are shown. Savings appear to range from a couple of dollars to thousands of dollars. Users are also able to see the cost breakdown of each prescription, from manufacturing to markup to pharmacy labor to shipping. Each prescription has a $3 pharmacy labor charge and a 15% markup, which is what keeps costs so low, according to the website.

Needless to say, fans are coming out of the woodwork, and studies are already being conducted to see how Cuban’s program could be used on a larger scale. Some are even calling for Medicare to adopt the program.

A group of Harvard Medical School researchers found that nearly a third of total U.S. drug spending last year was attributed to Medicare, a taxpayer-funded health insurance program for seniors.  The study also found that Medicare could have saved as much as $3.6 billion by using Cuban’s generic prescription drug program.

Currently, Medicare Part D, Medicare’s drug program, prohibits the government from directly purchasing medicines and uses private health insurers that are supposed to compete for patients by offering the lowest possible drug costs.

However, the billions that could have been saved with Cost Plus Drugs show that the system doesn’t operate as efficiently as it could.

“We see that Medicare is overpaying because of the complexity of the supply chain with multiple actors,” Dr. Stacie B. Dusetzina, an associate professor of health policy at Vanderbilt University Medical Center said to the Wall Street Journal. “We’ve created this behemoth system, and this alternative shows that if you strip out as many of those actors in the supply chain as possible, you can lower prices and still make a profit.”

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