Why are effective medicines so expensive?
How can drug prices fall while preserving access and incentives to develop new treatments?
What’s at stake
Patients encounter a price shaped by manufacturers, benefit managers, insurers and pharmacies. The recurring dispute asks which parts of that chain create useful services and which extract value through opacity. A second tension concerns innovation: how to lower the bill without weakening the incentive to develop better treatments.
The ideas that connect
Separate useful services from opaque pricing
Cuban’s disclosed-cost model attacks the inability to see what a medicine costs and what intermediaries add. Ricks explains why benefit managers originally mattered: processing claims and negotiating for pooled buyers. Together, those accounts suggest a sharper question than whether every intermediary should vanish. Can the useful functions be provided transparently, with incentives aligned to the purchaser?
Supporting passages
2025-09-09
And so I was like, this is wrong. So we got the URL costplusdrugs.com and we set it up so that when you go to costplusdrugs.com, costplusdrugs.com, and you put in the name of the medication, whatever it may be, we're going to show you our actual cost. And not only are we going to show you our actual cost, we're going to show you our markup, which is only 15%. Plus for mail order is $5 for shipping, $5 for the pharmacist to review. And then we also have the option of local pickup. Now what really created the change is we were the first to ever do that. And even to this day, three and a half years later, nobody else publishes their price list for medications. And so when you think about health care, particularly the financial side, nobody trusts it at all.
Open the source and seek to the timestamp above.
2025-09-29
We actually owned a PBM in the 90s. Why did they exist? Two reasons, to match up claims. So you can go into any pharmacy in the country with a card that says here's my benefit and that benefit can be adjudicated to you. That was a big IT problem in 1993 It's not really a big IT problem now and there's dozens of these so-called transparent or light PBMs. Actually our company is moving to one off of one of the mainline ones because it's in our business interest, but also their service is better. The other thing is negotiate like bulk discounts. So gather up a bunch of employers or plans, go to the drug companies, get a lower deal. I think that's fine. I'm for that too.
Open the source and seek to the timestamp above.
Competition and purchasing pressure work at different layers
Transparent pharmacy pricing targets distribution. Makary’s case for easier biosimilar entry targets competition among products; international reference pricing targets what purchasers negotiate with manufacturers. These are not interchangeable reforms. Savings at one layer can be limited if another still controls access, coverage or the effective price paid by the patient.
Supporting passages
2025-09-09
And so I was like, this is wrong. So we got the URL costplusdrugs.com and we set it up so that when you go to costplusdrugs.com, costplusdrugs.com, and you put in the name of the medication, whatever it may be, we're going to show you our actual cost. And not only are we going to show you our actual cost, we're going to show you our markup, which is only 15%. Plus for mail order is $5 for shipping, $5 for the pharmacist to review. And then we also have the option of local pickup. Now what really created the change is we were the first to ever do that. And even to this day, three and a half years later, nobody else publishes their price list for medications. And so when you think about health care, particularly the financial side, nobody trusts it at all.
Open the source and seek to the timestamp above.
2026-01-15
Oz and Chris Klopp and others at CMS, we did our part at the FDA to be a part of this. We've gotten drug companies to the table and we've got them to agree to most favored nation status pricing. That's going to radically lower the price of drugs. With the GLP-1 example, for example, it's going to come down to $149 for the first three months. Other countries are going to pay more. We have been financing 60% of the R&D cost to pharma companies. Other countries need to pay their fair share. And when it comes to this president, would be at NATO membership fees or whatever, he wants to see other countries paying their fair share. And so we're getting that delivered. Another big way in which we are going to lower drug prices is by cutting the red tape at the FDA for biologic drugs.
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The innovation tradeoff cannot be skipped
Oz presents lower negotiated prices and continued pharmaceutical innovation as joint objectives. Ricks’s account of purchasing intermediaries raises a related allocation issue: some spending may reward the distribution system rather than research. That creates room to ask where reductions come from. A policy that removes an unnecessary margin has different consequences from one that changes the return on developing a new treatment.
Supporting passages
2026-01-24
It's a great example. Most favored nation drug pricing, specifically addresses the problem you outlined, which is we just pay a bunch more for the exact same product, made the same factory often in America than our counterparts do here in Europe. So the president says, we need to change that. So he says, go talk to the drug companies, create some opportunities for risk for them. Make some rules, create some projects that if we were to act on them, would really hurt them.
A little pressure.
A little pressure. Build the crowbars and the baseball bats. Cut some trees down, hone the wood, but don't use them. And he very specifically said, do not hurt the innovative nature of pharmaceuticals. They are important to our nation. They save lives. We want to have the most innovative industries in the world because that's where the opportunities are to differentiate ourselves. It's also part of our national destiny. Be the best. So don't hurt the industry, but take some of the fat out of it. Pull it back and give it to the American people. Plus it's a fair way of doing things. And metaphorically, when you think about NATO and the president is saying to NATO countries, we're all in it together to protect ourselves against external threats.
Open the source and seek to the timestamp above.
2025-09-29
We actually owned a PBM in the 90s. Why did they exist? Two reasons, to match up claims. So you can go into any pharmacy in the country with a card that says here's my benefit and that benefit can be adjudicated to you. That was a big IT problem in 1993 It's not really a big IT problem now and there's dozens of these so-called transparent or light PBMs. Actually our company is moving to one off of one of the mainline ones because it's in our business interest, but also their service is better. The other thing is negotiate like bulk discounts. So gather up a bunch of employers or plans, go to the drug companies, get a lower deal. I think that's fine. I'm for that too.
Open the source and seek to the timestamp above.
What remains unresolved
Do lower negotiated or advertised prices reach patients, and which incentives change along the way? Track access and effective out-of-pocket costs alongside the effects on competition and research.
A selected guide · September 2025–September 4, 2026 · Sources and method