'We're trying to disrupt an industry': Mark Cuban touts pharmacy deal with Giant Eagle

Mark Cuban, the billionaire and Western Pennsylvania native now knee-deep in the pharmaceutical industry, offered strong words Wednesday toward the pharmacy benefit managers some say are bleeding drugstores dry.

“Get rid of them,” Cuban said at Market District in Robinson after announcing a partnership between his company, Cost Plus Drugs, and Giant Eagle pharmacies.

Benefit managers are the middlemen between drug makers and insurers.

One of their key functions is to negotiate rebates or discounts with manufacturers on behalf of insurance plans, which determines the prices insurers pay and pharmacies receive. Sometimes, the amount received by pharmacies fails to cover the cost of a transaction and actually causes them to lose money by filling a prescription.

Pharmacies often continue to contract with benefit managers, however, so they can keep access to customers on as many insurance plans as possible.

Cost Plus skips benefit managers and instead buys drugs directly from manufacturers or makes them itself. It then adds a 15% markup, plus whatever fees it has agreed to pay the pharmacy.

Cuban touts the model as keeping drug prices transparent and affordable for consumers.

“We’re trying to disrupt an industry that needs disrupted,” Cuban said.

Benefit managers don’t see it that way. Companies argue they improve claims processing and lower drug costs by leveraging their negotiating power with manufacturers.

“Mr. Cuban’s repeated comments about PBMs are unfortunate and a wholly inaccurate representation of how pharmacy benefit services actually work and save money for businesses,” said Greg Lopes, a spokesman for the Pharmaceutical Care Management Association.

Cost Plus runs an online service where customers can order medications directly. The Team Cuban Card is where brick-and-mortar pharmacies affiliated with Cost Plus, like Giant Eagle, come into play.

The free card can be obtained online or at the pharmacy counter. It allows customers to access the pricing available through Cost Plus, which may be lower than what’s offered through their insurance.

Cost Plus carries about 2,500 drugs, up from 100 at its inception in 2022.

“As Mark added more drugs into the program, this was the right time for us to get in,” said Giant Eagle CEO Bill Artman.

Online and in-store prices may vary.

It will be cheaper, Cuban noted, to pick up medications that must be refrigerated, because it costs about $25 to keep those drugs temperature-controlled in the mail. Other times, the website may be the way to go.

Cost Plus works with a handful of Western Pennsylvania pharmacies, but the Giant Eagle partnership that launched Friday represents the company’s first major foray into a region that Cuban knows well.

The former “Shark Tank” star and minority owner of the NBA’s Dallas Mavericks grew up in Mt. Lebanon. Though he now lives in Texas, he has kept a soft spot for the Pittsburgh region.

“We’ve partnered with 16,000 pharmacies,” Cuban said. “This is the only one I’ve showed up at.”

The Cost Plus partnership is just one way Giant Eagle is doubling down on pharmacies, which makes up about 30% of its business, according to Artman.

Giant Eagle is working to absorb thousands of Rite Aid customers after buying prescription files from about 80 of the bankrupt’s chain stores. The influx equates to about 6 million additional prescriptions a year.

To help handle this demand, the Cranberry-based grocer has hired about 150 former Rite Aid workers and has another 100 in the queue once the ailing drugstore fully winds down operations.

Expanding its pharmacy and grocery business go hand in hand for Giant Eagle.

Experts say supermarkets are uniquely well-suited to capitalize on the traffic their pharmacies generate, because people tend to fill their prescriptions and grocery shop at the same time.

That means if the Team Cuban Card brings in new customers, the supermarket side of the business will benefit, too.

“This is an opportunity for us to provide a service to our customers and give them the ability to save money,” Artman said. “It also drives a trip to Giant Eagle.”