Mark Cuban’s exclusive Fortune interview: ‘People think insurance companies have all the power. They don’t.’

This conversation has been edited for clarity.

You know, we’re a family program. So I’m going to use a few words in this introduction that I’m stealing from The Good Place, the television show, yes? You said earlier this year in a different interview that you like to “fork shirt up.”

No, I fuck shit up. 

Oh, oh see—I was trying. Sorry, Mom.

You know what? If you have a drink—because he said everybody here’s gonna be really intelligent. If you have a drink, chug it so I sound really intelligent. 

Oh, there you go. Perfect. Anyway, you said that in an interview. Initially, you were talking about when you purchased the Mavericks, the Dallas Mavericks NBA professional basketball team, quite a while ago now. But you also were applying it to this Cost Plus Drugs thing. Most people who want to “fork shirt up” throw an ax in Brooklyn somewhere, you know? Why did you decide to take on pharmaceuticals?

Because everybody thinks it’s fucked up, you know, and they’re right. There’s nobody who looks at the health care system or the pharmaceutical industry and says, “Wow, that’s well-run, that’s just the way we want it, it’s great for us, we love, you know, participating in it.” And so it originated because I got a cold email from a Dr. Alex Oshmyansky. He wanted to create a pharmacy in Denver that manufactured generic drugs that were on shortage. 

That’s not usually the kind of pharmacy I hear about in Denver. 

But so I was like—We started talking. I think I said, that’s interesting. I didn’t know generic drugs went on shortage. Didn’t seem to make sense. But it was right around the time that the pharma bro was going to jail, and I started digging in and looking at, you know, what he had done. And this guy just basically bought, you know, a whole year’s worth of manufacturing for a drug called Daraprim, a generic drug, and then just jacked up the price. And then as I started digging in more, it was obvious this was not an efficient market. It was very inefficient. It was very opaque. You know, if you think about what happens when you get a prescription from your doctor, they say, “Hey, you need this medication.” And the next thing that comes out of their mouth is, “What pharmacy do you use?” There’s absolutely no understanding or no interest in whether or not you can afford it, how it impacts your insurance, your deductible, your coinsurance, whatever. And so the more I dug in, I was like, okay, nobody knows what the price of anything is. If we create a company and we, A) limited our margins and B) published all of our pricing and our price list, then maybe we can have an impact. And we started on Jan. 22 of 2022 with 111 drugs and, you know, just a website. And I did a couple interviews, and the next thing you know it just blew up. And here we are just about three years later. I don’t know how many millions of people we’ve helped. I don’t know how many hundreds of millions of billions of dollars we’ve saved, but we’re up to 2,500 medications, and, you know, the industry now—CVS, all you know, Optum, all the big guys are having to copy what we’re doing. And so it’s been a great ride so far.

Can you briefly explain to those of us who have no idea how any of this works, which, of course, is the premise, exactly what it is that you do? So you you take these generics—

Yeah, it’s very simple. If you go to costplusdrugs.com—and I see a bunch of guys here and their wives probably, so let’s just use a sample drug. Let’s just say generic Cialis, Tadalafil. And you put in—guys, feel free to follow along—and you go to costplusdrugs.com and you put in Tadalafil. When it comes up, we actually show you our cost and let’s just say in this particular—well, I’ll skip that part. So we’ll show you our cost, and we’ll show you our markup, which is 15%. If you want it mail-order, then we have to have a pharmacist look at it so it goes to a pharmacy, our pharmacy, we’re partnered with. They look at it, that’s five bucks, and then we ship it. That’s another five bucks. And so, because it’s only a 15% markup, our prices are dramatically lower. And the other part of—so going back to Tadalafil, let’s just say a big bag of M&Ms is about $19? A 90-day prescription to Tadalafil is about $14. So you decide what you want in a bowl next to your bed. Again, that’s costplusdrugs.com. We’re trying to do all we can to improve the birth rate in America.

It’s a cost savings, and it’s great because, you know, you can see, you know, that might take the cost—typically, if you’re buying Tadalafil from $40 or $50 or $80 down to, you know, less than $20. But in this industry, because it’s so opaque, you these big pharmacy benefit managers that you may have read a fair amount about recently—they invent all these special categories. So they create this category called specialty pharmacy. Now for most of the drugs in specialty pharmacy, including generics, there’s nothing special about them. They’re just pills. But they’re special categories, like chemotherapy drugs like Imatinib, like leukemia drugs, like multiple sclerosis drugs, you name it. Those are considered special. And because they’re considered special, a drug like Imatinib, before we got in the business, they would charge $2,000 for a 30-day supply. We came in and Cost Plug 15%, now it’s about $21. A drug like Droxidopa, which is for all this different stuff. I’ll tell you the story to make it a little bit easier to explain it. I had a friend from college who was in this horrific car accident, and a mutual friend of ours emailed me last year and he said, “Look, Landon, he lost his insurance, and he needs this drug, Droxidopa, and they’re going to charge him $10,000 every three months. Can you guys get this? Because I didn’t see it on your list.” We checked into it. We got it. Instead of $10,000 every three months, it was $180 every three months. And now we got it down to about $90 every three months. And so you’ve got an industry where it’s just a mess, and given you guys all work for, you know, probably bigger companies, I just have to say this: You are getting “forked up” in your benefits programs. Because the same pharmacy benefit managers that are taking advantage of people with high deductibles, with high coinsurance, with high co-pay, they’re taking advantage of your benefits. Just a simple task for you guys to do with your HR person, your CFO, or your CEO—go to costplusdrugs.com and take your most expensive generics, because most of our drugs are still generics. We’re adding brand drugs as we speak. And just take your most expensive ones from your claims programs, your claims processing, and compare in price. I guarantee you they’re not going to tell you what the price is. You’ll ask them for all your claims, because you probably don’t get them, and they’ll say no. You’ll say, we want to compare the price you’re charging us, particularly if you self-insure. And they’ll say no. And if you think about it, this is your self-insurance or your insurance plans, and you as the employer want to know what you’re paying. 

Well, Mark, you experienced this yourself, as the owner of a basketball team, did you not?

Yeah, so when I first started Cost Plus, I looked at the Mavs, and we took our highest-priced generics, over an 18-month period, and we spent $160,000 through our insurance company. I then compared it to what it would have cost at Cost Plus: $19,000. And just time and time and time again. I don’t even know anything about your companies. I don’t know anything about your HR, but unless you have more than 500,000 employees, you have no idea what you’re spending on medications at your company. 

Now Mark, the setup that we have, the kind of conventional, the status quo, the thing you’re trying to disrupt, are these things called PBMs, right?

Pharmacy benefit managers.

And that system was supposed to help there be some price competitiveness. What happened? 

They got greedy. So the original goal of pharmacy benefit managers made perfect sense. You have an organization that works with a bunch of companies, and insurance companies, and says, “You know what? Let me aggregate all the demand that you have for prescriptions, and I’m gonna go to the pharmaceutical manufacturers, and I’m gonna negotiate for you.” Makes perfect sense. But then what happened is these pharmacy benefit managers wanted to grow more, so they bought the insurance companies, or the insurance companies bought them. And then they bought retail pharmacies. And then they bought specialty pharmacies. And now they’re even trying to do some things with manufacturers so that they’re completely vertically integrated. And so when you have your HR people go out to bid through your consultant and they say, well, look, there’s three big companies that control 85% of the market—it’s like the old thing, nobody ever got fired from buying from IBM. Your consultants just charge you money to tell you you might as well buy from these big three. But now that they’re completely vertically integrated, they think they don’t have to give you the best price, until we came along. And really, the most important thing that we’ve done to change the industry, and it wasn’t even completely intentional—we published our full price list. You know, like I said, you can go in there and look up generic Cialis, generic Viagra, whatever, Imatinib. But we published our full price list of 2,500 drugs so that companies now can go down the list when they can see their costs, or more importantly, their employees can say, “Wait, my coinsurance or my copay is $40 or $50 or $100 if it’s an expensive drug, but I can buy it from Cost Plus Drugs for $15. How is that even possible?”

Quick question for you about that. So we’ve been talking about generic drugs this whole time. What is your plan for brand drugs?

We’re ready to sell brands, but those big PBMs, they’re telling—so there’s this thing called a formulary, right? And what a formulary is, that’s the list of drugs that the employer or the insurance company negotiate with the PBMs to be able to offer all your employees or the insurees. And to be on that formulary is really important for drug manufacturers. It’s like an end cap at a retail store, right, because if you’re not on there, then all the people who are buying insurance from the insurance company that owns the PBM, if you’re not on that formulary, you can’t get access. You won’t be able to fill those scripts. So the big PBMs, the biggest PBMs, are going to manufacturers and say, “If you deal with Cost Plus Drugs, we’re going to diminish your positioning on the formulary. Or we’re going to remove you completely.”

Is there anything to be done about that?

Yeah, we’re doing that, but it takes some time. I mean, is it legal? No. But do you think the pharmaceutical manufacturers are going to cut up their nose to spite their face and say, Yeah, that’s exactly what they’re doing. They’ll tell us. Like Andy said, if you’re in private conversation at a table, you say something you know only if both parties agree. They’ll tell us all day long this is what’s going on, but they’re not going to say it publicly.

Quick question, one more quick question about this before I kind of change gears a little bit. Revenue? What was the revenue for this company last year? 

Actually, I’m not gonna tell you our revenue bill. I’ll tell you, I just saw our numbers. We just had our biggest month ever. So, yeah, it’s up and to the right like it’s supposed to be.

Right on. Okay. Look, national news around the UnitedHealthcare CEO. And with all that, to pick that apart a little bit, it touched a nerve in this country. How should the health industry interpret that moment moving forward? Because you’re trying to disrupt one part of it. 

Yeah, it’s brutal. But let me—[to audience]: How many of you work for companies or run companies that self-insure? Just a couple, okay. When you sign a contract for insurance, whether it’s your own plan, whether it’s ACA, whatever it may be, even Medicare, you tell the insurance company what you want to be on the formulary and what you don’t want to pay for. And so that’s the pre-authorization and that’s the pre authorization process. And now with Medicare Advantage becoming so prevalent, those networks are shrinking, and there’s more and more pre-authorizations going on, and companies are trying to save money. And, you know, you’re trying to, you know, determine, personally, for your family, how much of a premium you want to pay and what deductible you want. And all those go into the process of deciding what is going to be approved and paid for. 

And so, the insurance companies, rightfully so, are getting a lot of help, because 18% of the claims that they get they deny, and 99% of those that actually are challenged get approved, which means it’s just bullshit. And so if whatever you do now—so I guess my biggest point first is, we as consumers and we as companies have more control over the insurance companies than we realize. Because it’s been so opaque up to this point, everybody realized, the insurance companies have all the power? They don’t. And so if you, when you look at the plan that you’re looking at, or your company sets plan options, or you look at the ACA program, look to see what the pre-authorization and the denial issues are, because you can control and you can limit those so that you don’t get stuck nearly as much. Now you’re going to pay a little bit more, but being in that pre-auth position. So that’s part one. Part two is, I really think that, you know, Congress is going to step up and do something about denials and pre-authorizations and all that. It’s just too political, and it’s just—

This year?

Who knows? 

Yeah, please predict the future …

Yeah, who knows, but it’s certainly something. PBMs and health care and insurance are certainly going to be a topic that are going to be front of mind.

Understood. Okay, we had a very, very successful Fortune Brainstorm AI last month in San Francisco. It was fabulous. There is not a Brainstorm gathering that we have now that I cannot mention the two letters, A and I. You invest in a lot of things, health and otherwise. Where do you think—we’re talking about value with Cost Plus Drugs. So where do you think the value in AI will come from that could be narrowed to the health category or beyond?

Everywhere, everywhere. I mean, there’s not anything AI won’t touch. I’ve been in tech way too long. I mean, I remember when PCs first came out, and then I had a company, all we did was connect PCs, and back then it was like, all this is changing everything, and it did. Remember the early days when spreadsheets first came out? I do. And then we went to the internet, and I started a company that was the first streaming company, and it was like, wow, this is going to change a lot of things. None of those things compare to AI, you know. And along the way, we all figured we had to learn these new technologies. Remember you had to learn how to use your mobile phone and apps and be smart on your smartphone. We had to, you know, learn how to use streaming and Zoom and all these different applications. It’s just a non-stop progression. AI can just do more things than any of them. And so, like at Cost Plus, we have, you know, there’s still doctors who fax, literally fax, prescriptions. And so we use AI to, you know, take a picture of the fax and read, you know, the whole thing. And unlike OCR, Optical Character Recognition, an old-school way of computer vision, it actually takes all the data and puts it right into the exact process. If you have a new, you know, Apple iPhone with 18.2, the whole reason that was so important to them is what they call agents, right? They want you to say, “Siri, make a reservation for dinner at 8 p.m. at my favorite restaurant for four people.” And it’ll do it. And from a corporate perspective, all the things of capturing data and finding needles in haystacks, looking for trends. If you’re able to stuff all those into what’s called a large language model, then you’re able to just ask it questions. So we’ll throw all of our information from Cost Plus into—well, like now, I told you to go to cost plusdrugs.com, if you go to ChatGPT and say, “What’s the price of Tadalafil on costplusdrugs.com,” it’ll just tell you. There’s nothing it’s not gonna touch.

So let’s go to the audience for questions. These lights are very, very bright, so you’ll have to hold your hand very high. I see one straight to the back. Thank you. Please, your name and who you’re with.

[Audience Q&A begins]

Hi, Joel Myers, founder and executive chair of AccuWeather. A question for Mark: So with these innovations that you’re doing and with DOGE and so on, and of course the fact that health care costs have been rising 7% to 10% a year forever, what do you think health care costs are gonna be three, four, five years from now?

If I had my way, they’ll be down, because a lot of the issue is, there’s overlapping on the health care side in incentives. So for instance, we’re talking about the insurance plan that you pick. Well, you make the decision how much your deductible is going to be, but who takes the credit default risk on that deductible? The hospitals do. Now, that makes no sense whatsoever. Then you look at your insurance company and the hospitals and doctors that you work with. They negotiate. You would think they can negotiate a great price. But if you walk into a hospital and say, I want to pay the cash price versus the negotiated price by the insurance company, your insurance company negotiated, it’s going to be cheaper with cash. And so what I’m focusing on for my companies is, we’re doing direct contracting with providers. And what we’re saying is, we’re gonna trust the doctor. There’s no pre-authorizations, there’s no deductibles, there’s no co-pay, there’s no insurance, coinsurance, we’ll pay the whole thing. In exchange for that, I want you to charge me your cash prices are lower. And we’re getting them to say yes, but that’s not the interesting part. The interesting part is, once we have those contracts done, which we’ve got some signed, we’ll have more signed this year, we’re going to publish them all. So that rather than it being opaque and nobody understanding how all these pieces fit together, we’re going to publish them, and AccuWeather and anybody else who wants to use them can use them.

Right on. All right, yes, right, all the way in the back, yes. Thank you.

[Inaudible]. I’m an AI investor. Mark, I look up to you. 

Well thank you.

15 years, $60 million invested, and you recently said it was a net loss. 

No, okay, so let’s just stop you right there. So what he’s saying is, I did an interview two years ago, and these guys, the Nelk Boys, here in Vegas, said, “How are you doing with Shark Tank?” I said on a cash basis, I’m getting beat. But on a mark to market basis, I’m killing it. So like people do, they say, okay, they run with it. “Oh, Cuban, lost money on Shark Tank companies.” I put a million dollars into Beatbox Beverages, and I got a third of the company. I’ve been diluted some since, but, you know, they raised money at over $200 million this year. I gave $200,000 for I think 20% of Dude Wipes. Anybody ever seen Dude Wipes or use Dude Wipes? $200,000 for like 20%? They’re worth $300 million. So, you know, there’s MUSH, there’s, you know, Gameday Couture, all these different Shark Tank companies that are worth over $100 million that I own a chunk over, but I don’t count that, because it’s not cash. And so, if I did it, probably like you do your investments, you have investors in your fund or whatever. You mark them to market, right? There you go. I did mark-to-market. I’m fucking crushing it on a mark-to-market.

Thank you for your question. All right. Last one over here, quickly.

Hey, Mark, big fan, since the Broadcast.com days.

Appreciate that. 

My name is Steven Wolfe Pereira. I’m the CEO of a vertical AI company called Alpha & Co. And I’m curious, when you look at the average age of a board director, it’s about, plus or minus 70 years old. They probably still maybe get their emails printed out. You’ve said that they’re going to be two types of AI companies: Those that are great at AI and everyone else. And so I’m so curious, when are corporate boards going to get religion about AI? 

I hope never so I can just kick those companies’ ass, you know. Seriously, it’s a competitive advantage if they don’t adjust. You know, I truly believe—it’s, look, like I said, going back on all the technology enhancements that we’ve had over the last 40 years. Every time someone said, “Aw, we don’t need it.” But you had to learn it. It’s just not ever going to change. Technology is going to keep on marching on. But that’s the beautiful thing about this country. We’re like the technology-dominant country in the world, and we want everything that we possibly can do to keep on pushing that forward because that’s what makes us different. That’s part one and part two, what makes this country different than every other country in the world—we’re a country built on entrepreneurs. When you go to Spain, the UK, there’s not everybody talking about that company they’re dreaming of starting. That’s what we have here. So when I hear about, you know, bigger companies with set boards and they’re all older, I’m like, “Fine by me.” You know, that’s an opportunity. And so if you’re competing with them, great. If that’s your company—err, you know, it’s time to sit down with them and say, “Okay, guys, women, it’s time to change.”

I’m gonna steal the last question for myself. I’m not gonna let you sit here and not ask a basketball question.

But be careful, we lost …

Yeah, I know. I’m sorry. I’m sorry. You know, it was a tough one. I would love to know what you think the NBA should do to increase viewership. 

So that’s an interesting question, right? Because people use ratings as a metric for success. But at the same time, we say linear television is dying. It can’t be both. You know, like on Shark Tank—Friday nights on ABC. My last season. Watch early, watch often. Catch the reruns on CNBC. When I first started 15 years ago, we had 4 million people watching. Then we got up to 9 million people watching, maybe eight years ago. Now, if we have 3 million, that’s great. And I remember them telling us we have to have a 2.0 in the 18 to 49 demo. That’s the advertiser rich demo. Now, if we have a point three that’s great. And last year was a point five, and that was great. The NBA with our worst games tops all that, right? And it used to be inconceivable that a game on cable would beat any broadcast television, any show broadcast on broadcast television, inconceivable. Shark Tank used to just destroy the NBA in 18 to 49. But even more importantly, the way kids consume content now, like I have a 15-year-old son, and he doesn’t watch the whole game. He watches the highlights over and over. What did Luca do today? What did Kyrie do today? What did Steph do today? What did Derek Lively do today? And they’ll just watch, and it’s just, you know, because of the algorithms in our social media, whether it’s YouTube, Instagram, I’m on Bluesky now, that’s my new favorite. You can all follow me on Bluesky @mcuban, and I answer a lot more questions than Twitter. Twitter’s a shithole these days. But the algorithms that just keep on showing, so if you’re into sports, like you just see highlights continuously. And I say that because as we move at the NBA to online streaming more than linear, you’re going to start to see us do what Netflix does where it doesn’t give you a rating, per se, it shows you total minutes consumed. And if you look at total minutes consumed by the NBA, we’re crushing it. We get, I mean, our viewership numbers on, you know, Instagram, you know, YouTube, etc., TikTok, blow away the NFL.

All right, enough said. 

So there you have it.

Mark, thank you for being with us tonight. 

Thanks for having me.