Billionaire Mark Cuban Says One Man Taking a Pill From $13.50 to $750 Is Why He Started Cost Plus Drugs, ‘How Can This One Guy Take Control Of This Drug’
In the autumn of 2015, the price of one pill of Daraprim, a decades-old drug used to treat a parasitic infection that threatens people with weakened immune systems, rose from about $13.50 to $750. No new formulation and no shortage. A small company had bought the U.S. rights, and its chief executive decided the market would bear it.
That man was Martin Shkreli, then the head of Turing Pharmaceuticals, and Mark Cuban says the episode is part of the reason his pharmacy exists. Cuban has spent years attacking America's drug pricing system, and Cost Plus Drugs, the online pharmacy that carries his name, sells generic medications at acquisition cost plus a fixed markup. Asked where the idea came from, Cuban went back to that pill.
Notably, while Shkreli received much of the negative media attention for the Daraprim price hike, Valeant Pharmaceuticals built a substantial business around similar practices for years. In 2014 and 2015, STAT News found that Valeant raised prices across its 146-drug portfolio by an average of roughly 76%.
Congress also investigated the company, zeroing in on four particularly extreme examples:
- Cuprimine: roughly 6,000% increase
- Syprine: roughly 3,200% increase
- Isuprel: roughly 720% increase
- Nitropress: roughly 310% increase
“That was right around the time Martin was going to jail, so he was in the news, and I was like, how can this one guy take control of this drug and jack up the price that dramatically,” Cuban said in a WIRED Big Interview.
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Alex Oshmyansky, an emergency radiologist just out of a fellowship at Johns Hopkins, had watched patients get sicker because they could not afford their medicines. By Undark's 2022 account, Shkreli's price increase pushed him to start a company, Osh's Affordable Pharmaceuticals, to make cheap generics. About three years later, he had raised roughly $1 million, and it was then that he reached out to Cuban by cold email, and Cuban decided to go all in. The company was renamed the Mark Cuban Cost Plus Drug Company and opened for business online in January 2022.
Laid out by year, the two versions fit together better than they first appear. The Daraprim increase was in September 2015. Shkreli was convicted in August 2017 and sentenced in March 2018 to seven years. Oshmyansky's email to Cuban is widely dated to 2018. Cost Plus Drugs launched in January 2022. When Cuban says the idea arrived “right around the time Martin was going to jail,” he is placing his own entry in 2018, which is precisely where the documented timeline puts it. Shkreli was why Cuban started paying attention; Oshmyansky was why there was something to pay attention to. Both things are true, and neither man's telling contradicts the other.
Despite the common misconception, Shkreli did not go to prison for raising the price of Daraprim. He was convicted of securities fraud. The sentence had nothing to do with drug pricing, and raising a price the way he did was not a crime. It just so happened that the two companies involved in these frowned-upon practices also had other company issues alongside the price increases.
What Cuban says the fix is has not changed since. He has argued that the way to remove insurance companies from the equation is to price drugs openly and let patients pay cash. Cost Plus publishes the cost of each drug, its markup, and its fees on every product page, which is the opposite of how Turing priced Daraprim. The company is privately held, and Cuban owns it, so any price comparison drawn from its own site is a company claim rather than an audited one. The pill that started it is still the measure. One man moved it from $13.50 to $750 in 2015; the company that exists because of him publishes its margin on every drug it sells.
On the date of publication, Caleb Naysmith did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.