Billionaire Mark Cuban recently announced his online pharmacy that will provide generic medications at a significantly lower price. Mark Cuban Cost Plus Drugs Company (MCCPDC) looks to solve the inability of a lot of Americans to afford the necessary medications that face price gouging by pharmaceutical companies.

The social benefit of what Mark Cuban established is the driving factor for this new business. Medication insecurity is a problem that millions of Americans face on a daily basis. According to a Gallup Poll done regarding medication insecurity, “Among respondents with three or more chronic conditions, or eight or more prescriptions, reports of being unable to pay for a prescribed drug in the household reach 11 percent and 18 percent, respectively.”

On top of the inability to afford medications Gallup found that 10 percent of respondents reported they had skipped a dosage in an attempt to ration their prescription because of the cost. Adults older than 65 are twice as likely to follow this pattern of skipping dosages because of the cost of the prescription.

Daraprim, a drug that received headlines in 2015, is an example of a drug that saw rapid and extreme price inflation that left people in need of daraprim unable to afford the drug. At the time Martin Shkreli bought the rights to the drug daraprim and immediately increased the price from $13.50 to $750. This extreme price increase and people like Martin Shkreli within the pharmaceutical industry are the problems that Mark Cuban looks to solve.

Mark Cuban Cost Plus Drugs Company co-founder and CEO, Alex Oshmyansky when speaking about the current and previous state of the pharmaceutical industry said, “There are numerous bad actors in the pharmaceutical supply chain preventing patients from getting affordable medicines. The only way to ensure affordable prices get through is to vertically integrate.”

According to the Mark Cuban Cost Plus Drugs Company website, there are many areas of the United States that face outbreaks of hookworm. The drug that is prescribed for hookworm is Albendazole which can cost up to $500 per course which makes it far too expensive for a disadvantaged population. The cost of Albendazole at Mark Cuban’s website is $26.08 per course.  In addition, Albendazole is listed on the MCCPDC website as a retail price of $6,565.28 and MCCPDC’s price is $453 which is a $6,112.28 discount.

Also, the MCCPDC website says there is a mark up of 15 percent on the prices of their drugs to keep the company running while also forcing the retail price of the drugs downward. The 15 percent markup is consistent for all drugs provided by MCCPDC which gives the transparency of the price increase that many pharmaceutical companies do not offer. By doing this the Albendazole course is $26.08, but with a 15 percent mark up it is $30.  Then, MCCPDC adds an additional $3 onto the charge that the pharmacy partners of MCCPDC charge to provide the drug for the person in need.

By having the additional charges on top of the drug price, MCCPDC has the customer pay out of pocket which keeps insurance companies out of the transaction.

MCCPDC is classified as a pharmacy benefit manager (PBM), and this classification provides the ability for MCCPDC to negotiate the prices of the drugs directly with the drug manufacturers. The negotiations between MCCPDC and drug manufacturers are also something the MCCPDC wants to be transparent about with consumers so the customers know how much MCCPDC gets the drugs for.  As a PBM, MCCPDC is also able to work directly with companies that offer insurance plans that cover drugs. By doing so, companies will be able to save millions on coverage by offering discounted prescriptions directly to the company.

Mark Cuban looks to expand upon this business as well with the construction of a drug factory in Dallas. The $11 million manufacturers will allow MCCPDC to keep expensive drug prices low.

Whether Cuban will solve medication problems within the U.S. directly or not, he is making a wave through the pharmaceutical industry that has never been seen before. Cuban’s drive and mission to solve the medication problems can be exemplified in one sentence, “Everyone should have safe, affordable medicines with transparent prices.”