--:-- Host (Olivia Webb): You trust your doctor, hopefully. But after that, there is nobody in the supply chain or care chain, that financial chain, that you trust. And nor should you. If you were just to walk in and didn't have insurance or high-deductible insurance, and you walked into one of the big three pharmacy retailers, you might pay $2,000 a month. Our price is, depending on strength, $14 to $61 a month. It's just insane, the discrepancy. And the crazier part is the pharmacist who's ringing it up after having gotten the prescription, they don't know what they're going to be charging you until it appears. There's all these things that are designed only to get revenue from the insurance companies. That's it.
--:-- Host (Olivia Webb): Here at the A16Z podcast, we have covered the American healthcare system a lot recently, and for good reason. If you missed those episodes, we covered how fintech in particular may be playing its role in healthcare disruption. So go ahead and listen to those two episodes. We'll link them in the show notes. But today we have one very familiar founder. You may have heard of him, Mark Cuban, who's also got his eye on the same industry through his company, Cost Plus Drugs. This conversation covers a ton of ground, but in particular, it touches on this idea, this really important concept of inefficient markets. And inefficient markets don't just exist in healthcare. So I think there's a lot of learnings here for founders in other industries. This is also a crossover episode from our sister podcast, BioEats World. And I recently got a sneak peek into some of the guests they have coming on. And there are some really big names, just like Mark Cuban. So make sure to go subscribe to BioEats World wherever you get your podcasts. All right, Olivia, BJ, Mark, take it away.
--:-- Host (Olivia Webb): Hello and welcome to BioEats World, a podcast at the intersection of bio, healthcare, and tech. I'm Olivia Webb. Today's episode is with Mark Cuban, founder of multiple businesses, owner of the Dallas Mavericks, one of the sharks on Shark Tank, and co-founder of the Mark Cuban Cost Plus Drug Company. He is joined by Vijay Pande, founding partner of A16Z Bio and Health. Together, they talk market forces in healthcare, the importance of trust to patients, and Mark's ideas to tackle the Gordian knot that is American healthcare. Let's get started. Mark, thank you so much for joining us.
--:-- Mark Cuban: Thanks for having me, Vijay.
--:-- Vijay Pande: A lot of people would really be curious to hear about your arc as a founder and as a businessman. In particular, I was really struck by the fact that you started early. You started business when you were 12.
--:-- Vijay Pande: I'd love to hear your take on that. What drove you to be thinking about business and startups and entrepreneurial behavior at such a young age?
--:-- Mark Cuban: Necessity. In our household, if you wanted something, you had to earn it. You mentioned being 12. I went to one of my dad's poker games he had at the house with his buddies. They were drinking and yucking it up. I went in there asking him for a new pair of basketball shoes. I was a basketball junkie all the way back then. He looked at my feet and said, "Those shoes look like they work. When you have your own job and you can afford it, you can buy your own." I said, "Dad, I'm 12. How can I get a job?" One of his buddies at the poker table said, "Hey, I've got these boxes of garbage bags. You can go sell them throughout the neighborhood." So I did. I put them in my little wagon. I would literally walk around and you'd hear, "Hi, my name is Mark. Do you use garbage bags?" Who's going to say no to a 12-year-old version of this space? I learned to sell, which was the most important feature. Once you know how to sell and you're confident in talking to people and making an offer and being rejected, then it's just a question of picking up other skills.
--:-- Mark Cuban: From there, I sold magazines door to door. Then I was 15, 16, and I was looking at having to pay for my own college. I started buying and selling stamps. I would go to stamp shows. Stamps at that time, and coins, were the least efficient market on the planet. I could go to one dealer in one part of the show, pick something up for 50 cents, go over to another and say, "Based off this catalog, this stamp is 50. I'll sell it to you for 25." I sold it for 25. I just kept ramping that up. That helped me pay for a bunch of stuff in school at Indiana. When I got to Indiana, it was just every hustle all the way to earning a bar. It just kept going.
--:-- Mark Cuban: The underpinning of it was: if you can sell, if you can recognize where there's inefficiencies, if you're curious, if you can learn. Those were the hallmarks. I learned that I could know more about this little stamp market as a 16-year-old than the people who were doing the selling. There are so many inefficient markets, and we'll get to it with healthcare. Once you understand that, the opportunities are everywhere.
--:-- Vijay Pande: Along the way, you've also had to build teams. Whether we're talking about the Mavs or companies along the way. I'm curious if you have lessons for current entrepreneurs. How do you take a bunch of brilliant, high-performing people and get them to work together?
--:-- Mark Cuban: When you have a vision and a goal and you can align everybody towards that, it's really not hard to get gifted people to come along. Even maybe take less than market wages if you give them equity opportunities. That's where I was able to really succeed with a lot of the companies I was in. Every company I've ever started, as opposed to took over, I've given everybody equity. My first company, Micro Solutions, we sold for $6 million. A million of that went to employees. We had 80 employees, so there were a lot of really happy people. Broadcast, Audionet turned into Broadcast.com. When we sold it for stock to Yahoo, out of 330 employees, 300 became millionaires, at least on paper at the time. We kind of told them to hedge everything. It went on from there. HDNet, the same thing when we sold that. When everybody's a participant, everybody is aligned. You can get people's personal goals to align with your vision as an organization. It tends to work.
--:-- Mark Cuban: Where things get off the rails sometimes is people bring on their own agendas. But that's one of the benefits of being in the middle of the country here in Texas. Technology is not the industry of Dallas, Texas. We get a lot of great smart kids from University of Texas, SMU, and other great schools. We get employees from TI and other great technology companies. But they're not always looking over your shoulder to the next founder or startup they're going to create. That makes it a lot easier to have a culture geared towards the success of your organization. And everybody's participating in that upside.
--:-- Vijay Pande: That cultural part seems like a huge deal. How much do you feel like that comes from what you build versus geography versus how you pick the people? How have you built it?
--:-- Mark Cuban: Geography has a lot to do with it. The zeitgeist, the mindset here in Dallas is night and day different than New York, L.A., San Francisco, the Bay Area. When I go into the Bay Area and the Valley, it was always, "Hey, we're the smartest. We're dealing with you. We've got an edge." When you're dealing with that — and I've invested in companies there — talking to founders there, they have a completely different approach and mindset because their employees have a completely different approach and mindset. Wherever you are, wherever you're headquartered, wherever your bases are for however many offices, geography will have an impact on your culture. It's just a reality.
--:-- Vijay Pande: One last question on the founder arc. What advice would you give to your younger self? What do you wish someone told you? I know there's often not a silver bullet, but I'm sure you've thought about it.
--:-- Mark Cuban: I would say, "Don't screw it up." But the interesting thing is there's two questions there. When you're just getting started, I would tell you that curiosity, willingness and excitement to learn, ability to sell, and ability to be nice. Those four elements. I wish somebody would have told me to be nicer because I was always go, go, go, go, go, go. Ready, fire, aim. Let's go. Let's go faster, faster. Sometimes it took my partner, Todd, telling me, "Look, you're scaring some people. You're going faster than they're typically going to go. You can't get mad." I would get mad if I thought people didn't use my version of common sense. You can't do that. People are not going to be happy with that.
--:-- Mark Cuban: The other thing I would add that I think I did right: I was always geared towards profitability, not geared towards just getting my next raise. When raising money was a necessity, it was a necessity. But I've always tried to teach entrepreneurs that raising money or borrowing money is not an accomplishment, it's an obligation. Particularly right now in this market. Gearing towards profitability, I think, is a message along with being curious, learning, selling, et cetera.
--:-- Vijay Pande: What brought you to healthcare? Why healthcare of all the things you could be doing?
--:-- Mark Cuban: I started about five, six years ago when the Republicans took the White House. Having friends that were part of that here in Dallas, for better or worse, there was the desire to overturn the ACA. I said, "Okay, that's great. What are you going to replace it with?" We started having these intellectual conversations. What would we do if we were going to change all this? That got me into it.
--:-- Mark Cuban: Then about late 2018, maybe early 2019, I got a cold email from a Dr. Alex Oshmiansky, a radiologist by training, super smart. He was starting a compounding pharmacy in Denver. The goal was to take generic drugs that were on a shortage list — shockingly enough, there are generics that go on shortage lists and are hard to come by — and sell them at a reasonable price, knowing because they're in shortage that there was demand. As we started going back and forth and I'm peppering him with questions, this was also right around the time the "Pharma Bro" got thrown in jail, or the conversation was loud. I thought, "If he can jack up the price of Daraprim by 7,500%, that's an inefficient market. If he can jack it up by 7,500, there must be an opportunity to cut it by some amount as well to be able to sell."
--:-- Mark Cuban: As we started digging into it more, the tech industry has a ton of acronyms — TCP/IP, Stax, whatever. It is nothing compared to the pharmaceutical industry. The pharmaceutical industry has 50 different acronyms for price. The other thing that came to the forefront very quickly was that our competitive edge could be transparency. Just showing people what we're doing would create such a differentiation. It would overcome what I think is the number one missing element in healthcare: trust. You trust your doctor, hopefully. But after that, there is nobody in the supply chain or care chain, that financial chain, that you trust. Nor should you.
--:-- Mark Cuban: That was the genesis of CostPlusDrugs.com. It took several years to get all the licenses, get all the agreements, get all the software done. The software is just basic stuff — API stuff and website stuff. But it took us a while. It took us time to get everybody to believe that we were real, that we weren't just the next company making big claims. That's why I put my name on it. It's the only company I've put my name on as Mark Cuban Cost Plus Drugs. Once we got started, we launched on January 19th, 2022, with our website. If you go to CostPlusDrugs.com, you can look up to see if your medications are any of the 1,100 plus we carry. Since then, it's just blown up. It's been insane.
--:-- Vijay Pande: What do you think about the concept of market forces in healthcare?
--:-- Mark Cuban: It's hard to have market forces when there's no transparency and people don't even know what the price is. Think about the process of getting a prescription. The doctor says, "You need this medication." The next question isn't, "What does it cost? What's the best way?" The next question is, "What pharmacy do you use?" Then you go to the pharmacy and you hope your healthcare insurance covers everything. If you're a big company, you probably already know. If you're a middle-sized company, you may not know. If you're a small company or an entrepreneur or individual market enrollee, you're terrified. You have no idea what it's going to cost. The crazier part is the pharmacist who's ringing it up after having gotten the prescription, they don't know what they're going to be charging you until it appears. There's all these inconsistencies in this completely opaque industry. It was ripe for disruption.
--:-- Mark Cuban: The business model was very simple. We buy drugs, we sell drugs. When you go to CostPlusDrugs.com, you put in the name of the drug. One drug we have a huge discount on compared to everybody else is a chemotherapy drug called imatinib. If you were just to walk in and didn't have insurance or high deductible insurance, and you walked into one of the big three pharmacy retailers, you might pay $2,000 a month. Our price is, depending on strength, $14 to $61 a month. It's just insane, the discrepancy.
--:-- Mark Cuban: When you go to CostPlusDrugs.com and you put in an NDC number or any of our medications, you see our cost. You know exactly what we pay for it. You see our markup: 15%. You can decide if that's fair or not. You see our pharmacy fee. Right now it's $3. It's probably going to go to $5 here in the summer just because our costs are escalating. Pharmacy costs are escalating. Then $5 for shipping. You know exactly what you're going to pay and why. That has accomplished two things. It's built trust because people realize we're not stealing, we're not jacking things up. They can compare us to other sources or what they've paid or their companies have paid. The other thing is it's created a benchmark.
--:-- Mark Cuban: What we didn't expect that's happening now is researchers like Harvard went and took a bunch of our medications early on and compared them to what Medicare was paying. They realized that for just a limited number of generic medications, we could save the taxpayers $3.6 billion a year. A couple urologists at Vanderbilt did the same thing for, I think, seven urology drugs, and it was $1.2 billion a year. Our government officials at Medicare, CMS, et cetera, just never had reference pricing that was legit that they could use. By providing that, again, it engenders trust and opens people's eyes that we're the real deal.
--:-- Vijay Pande: Originally, it seemed like this was going to be about generics, but you recently signed a deal for two non-generics. What does that look like and where do you keep going? What's the future look like?
--:-- Mark Cuban: Fundamentally, there are a couple problems that pharmaceutical manufacturers have. It's easier for generic manufacturers to deal with them because typically, for a generic medication, there's competition. We could go in there and even at lower volumes, at least find one of the competitors and have the opportunity to sell it. The generics were the low-hanging fruit for us to get started. But when you talk to generic manufacturers, they feel demonized as well. Brand manufacturers definitely feel demonized because when anybody talks about the price of medications in this country, it's, "Oh, it's the pharmaceutical industry. It's the manufacturers that are the bad people jacking up the price. Look at insulin." Without realizing the retail price of a vial of insulin may have been $300 some dollars, but the net revenue to Lilly — and it's clear in their quarterly earnings conference calls, they talk about it — was in the 20s.
--:-- Mark Cuban: Initially, working with generic manufacturers proved the concept and allowed us to gain a base of customers. Talking to the brand name manufacturers, they hate the system. They absolutely hate it. They're demonized. They don't like the game of having to kiss up to the PBMs, the big three PBMs, and the influence they have on pricing and patient satisfaction, information access, all the above. We talked to Janssen, part of J&J. We've been working on this for Invokana and the variations of it for over a year now. The contractual side of it is the difficulty. It's not the desire by the brands to work with us. It's just dealing with all the contracts because the big three PBMs don't want this to happen.
--:-- Vijay Pande: What's the grandest vision of this? Do you become a PBM?
--:-- Mark Cuban: No. Well, in essence, we could become a PBM, but we'll work with any PBM that doesn't do rebates. There's ones like Imsana and others that you can see on the CostPlusDrugs.com website that we've partnered with. We'll work with anybody that doesn't support rebates or any kind of ancillary cost additions. That's what creates the distortions in pricing. Then you get a misalignment of incentives. What people don't realize — there's a lot of talk now about the bad side of PBMs — but what they're not discussing is the fact that the PBMs either own or are owned by big insurance companies, and they also own the big three pharmacy retailers. When we looked into it, our basic evaluation was these PBMs have at least 200, if not 250, different subsidiaries. As long as they keep the pricing opaque and the supply chains opaque, they can left pocket, right pocket all the revenue. If regulation comes across where the PBMs can't do rebates or they have to modify their rebates or reduce their rebates, they'll get it out of a copay aggregator or they'll charge at the retail level and the patients will pay it there, or they'll come up with some other type of play that allows them to accrue more revenue. Despite all this discussion of regulation and the regulations we've seen, you don't hear any of those big three companies talking about declining earnings or revenues.
--:-- Vijay Pande: We started our chat by talking about these arbitrage possibilities that you build businesses on. In a sense, this is kind of an arbitrage possibility — people are charging things and you can do better. But people's lives are a different thing than buying a car or buying soap. There's no alignment between patient outcomes and healthcare companies' profitability. There's a lot of discussion about accountable care organizations and value-based pricing.
--:-- Mark Cuban: They've already failed. The reason they've already failed is because the benchmarks they use to create value is relative. There's a thing called MedPAC that sets the baseline prices of Medicare. The baseline benchmark for that was from 1993. It's never been rethought. It gets adjusted, but it's never been rethought. Is that the right way to do it? When you talk about market forces — this is too much information, but I decided to get a CT colonoscopy instead of the Roto-Rooter kind. I went to local hospitals and looked at all their price lists, which are online. It's insane. The biggest insurance companies for a CT colonoscopy — they show all the different deals and everything. Each insurance company has multiple deals with that same hospital. They're all different prices. And the cash price is 25% of it. If there were market forces at play, the bigger player should have been able to get better pricing. There shouldn't have been five different prices for each insurance company for the hospital and their network. There's not an alignment with market forces or for profitability with the patient. It is going to fail. Insurance has failed.
--:-- Mark Cuban: I'm not here to tell you I'm for single payer. I'm not. What I am here to tell you is that insurance companies, as much as they do a lot of talking about better patient outcomes and they do some things that do help, you cannot be the driver of 30 to 40% of hospital and healthcare costs for a provider to deal with administration and revenue collection and revenue identification and call it a market force-able industry. You just can't.
--:-- Vijay Pande: Aligning incentives of profit and patients' well-being makes a ton of sense. A healthcare operating system that reflects the current operations of healthcare is doomed to fail because you're taking a broken model and replicating it and adding efficiencies on the margin.
--:-- Mark Cuban: I tried to get involved with a hospital here recently. They didn't follow through. I saw that they were for sale. It was small in North Texas. All I asked for were the absolute cost and variable costs. I don't want to know about administration, how you code. I don't want to know about revenue enhancement cycles. I just want to know what their nut was that they had to hit every month so I can figure out a different way to create revenue. They wouldn't do it. Couldn't do it. I tried to pay for a study that asked CFOs of major hospitals what cost accounting they do. None would participate.
--:-- Vijay Pande: You're speaking to the bigger problem of misaligned incentives, lack of transparency. I agree with you about the limits of single payer. But then what do we have left? What's the way forward?
--:-- Mark Cuban: If you go to the origins of pharmacies in the 1950s, pharmacies bought medications, they sold medications, they gave you advice on what not to mix and match. We went right back to that. The origins of hospital healthcare insurance was they went to the local communities, to individuals, to businesses, to unions. They said, "Here's the amount of revenue we need to break even and make a little bit of money. If you all contribute that, we'll provide all the services that we're allowed to provide. We'll let the community decide what services to retain and what services to add and the cost associated with it." That's what's going to need to happen.
--:-- Mark Cuban: Think about what happens when you do that. You're familiar with healthcare. There's medical coding. There's Medicare cost reports. There's all these things that are designed only to get revenue from the insurance companies. That's it. Coding isn't about better healthcare. Medicare cost reports can be used for analysis, et cetera. But the reality is it's just a cost associated with generating revenue from the insurance companies. Those insurance companies change those contracts every year. They change the network so you need even more administration. You've just got to slice those out completely.
--:-- Vijay Pande: You're describing healthcare driven by consumer forces, where consumers are the customer instead of the payers being the customer.
--:-- Mark Cuban: But it's got to be more of a Netflix model.
--:-- Vijay Pande: Tell us more. What do you mean by Netflix model?
--:-- Mark Cuban: Meaning that whatever Netflix has in their library, you get for what price. It doesn't say I can give you every movie, anytime, anywhere, every show. But whatever specialty, whatever value we can create from a content perspective, you get for this price during this period of time. It's a silly analogy at some levels, but it's true. If a hospital has X number of doctors for X specialties and they can offer it, and this is what the community feels it needs to support itself, then the community knows. Let's say pick a number out of the year: it's $100 million a year for fixed overhead and variable estimated costs. We have to generate $100 million this year, $110 million next year, just to break even. We'll plan to break even. Now all of a sudden, you can go to the community, go to the city, state, county, local businesses, local people, and say, "How do we create $110 million to support this community?" Once you extract all the other mishigas — all the overhead that's designed to hide and deflect and everything else — now you can start looking at a market-based model that truly works.
--:-- Mark Cuban: It stays market-based because — and let me have one thing — it's got to be 100% transparent. It's got to be a system where your general ledger is open and available 24/7 on a read-only basis to anybody who wants to see it. Think about what happens then. We're already in a world where people are talking about more transparency for salary and earnings. Some doctors might not feel comfortable with that, or nurses or janitors might not feel comfortable with it. Okay, don't work here. But if we're going to change healthcare, just like we started showing our prices, our costs, that's what it's going to take. You have to extract all the ancillary costs that aren't aligned with better patient outcomes or better costing. The only way to do that is to just extract the way payments are done today.
--:-- Vijay Pande: Where is the role of innovation? Often, if you're in a sort of cost-plus world — and I know that's not what you're describing for everything — but in that type of world, you don't get paid for innovation. You just get paid for doing the services.
--:-- Mark Cuban: Sure you do. Right now, with specialty drugs, it might be $3.5 million for a hemophilia drug. The way they price that is knowing that out of the total addressable market of patients, there may be 10,000 patients. They know that the insurance companies are not aligned with getting those patients healthy. They're aligned with not paying at all. They're trying to laser and exclude them and push them to their patient programs. If that same hospital or Medicare could go to the creator of that new specialty medication and say, "Look, we understand you've got to make a profit. We also understand that there's 10,000 potential patients and you've priced this expecting to only sell it to 1,000 of them. That's why it's $3.5 million. Let's go that Netflix model again. Our little hospital here in North Texas who might have a DMA of 100,000 people will give you X amount of dollars. If you take the same approach everywhere else, for that X amount of dollars, we get as much of this as you need. Your marginal cost for that therapy might be $1,000, $5,000, $10,000. We'll even pay you your actual marginal cost. Just be transparent with us."
--:-- Mark Cuban: For innovation, the risk mitigation side of selling what you've innovated on becomes a lot cleaner and a lot more applicable. The hard part of innovation is how do you sell it? How do you deal with the people who aren't ready to take on the new innovation versus those who are, and pricing it to deal with that curve?
--:-- Vijay Pande: One interesting trend we're seeing in how drugs are being made is that it used to be that all drugs were kind of discovered. We're moving closer and closer to a world where they're designed, where you have platforms that can actually go after a variety of things. To the extent you have a real platform, you can ask from the beginning not just, "What can I discover?" but "What can I go after? What areas would there be the greatest need? What are the biggest markets?" You need good data for that.
--:-- Mark Cuban: Think about how data is siloed right now. The insurance company that's going to pay for it and has all the patient information on an aggregate basis across multiple hospitals and multiple providers doesn't share it with anybody. One of the reasons Cost Plus Drugs is getting popular with and will be popular with brand manufacturers is because we'll allow them to have a direct relationship with the patient. The way the big three PBMs work right now is they charge them for any data. You can't learn from it because to do what you've suggested requires learning from a knowledge base to know what you need and the best application of your innovation in dollars. There's no centralized source of information. Everybody wants to sell that. There's ways to get there. But again, transparency sometimes is the most innovative element in an industry where it's completely opaque.
--:-- Vijay Pande: What you're describing sounds almost like Amazon marketplace for drugs or something like that.
--:-- Vijay Pande: Yes or no. Early Amazon, 1997, yes. Amazon 2023, completely different.
--:-- Mark Cuban: Yeah. Fair enough.
--:-- Host (Olivia Webb): Well, I'd love to switch gears and talk a little bit about the policy and regulatory side of the world, because so much of this gets entangled in there. Maybe it started in the blue skies from the beginning. What are the things that we need to change to get U.S. healthcare going to where we all want to go? I think our collective dream is for it to be the best healthcare in the world, but I don't think we feel like we can say that today. What are the changes, whether we're talking about policy, business, or otherwise? But I have a feeling policy would be a key part of it.
--:-- Mark Cuban: Actually, I think it's going to be hard simply because right now politics is so much about perception as opposed to reality. We want to have a great headline as opposed to a great result, because not long after the headline is released, people don't track what the results are. And debatably, solving problems doesn't really gain political points.
--:-- Host (Olivia Webb): Right.
--:-- Mark Cuban: And again, putting your hat on of the people who are being regulated, who is more agile, them or the government? Who's going to be able to find ways to retain? It's rare, if ever, that you see in the healthcare industry people talking about having net reduced revenues because of regulation. It may be because of the pandemic, et cetera, whatever. But those people who run the companies that are going to be most impacted aren't afraid of the regulations, and they lobby the hell out of it. And when you talk to our politicians, it's rare and difficult for them to understand it. So what do you do? You look for the things that are simple.
--:-- You know an example that will never get passed: complete transparency. If you want to do business with Medicare, the general ledger for your company has to be online 24/7 for anybody to see. Never going to happen, but it sure would change the game.
--:-- Host (Olivia Webb): How would that change the game? You wouldn't be able to hide?
--:-- Mark Cuban: Well, yeah, you couldn't hide anything. And because it's public, every CEO is going to be over the gun for every decision they make. Most people aren't going to understand what they see. But if you or I or any of us are looking at it, we're going to be able to go bam, bam, bam, bam, bam and understand where things are going. But that won't help.
--:-- Then you can look at simpler things. If you look at the contracts between insurers, the payers, and hospitals, and the fact that there might be five different contracts for a particular item, but more importantly, they change every year. You could say, one, you have to use a universal contract that every hospital has to use and every insurance company has to use. So you simplify the administration of it. You can say that you can only change it every two years and not every year. You can say that you can't change your network for some period of time. Those are the types of things that are low-hanging fruit that might save 1% on the margin. But 1% in this world is a big number.
--:-- Host (Olivia Webb): It's a huge world. It's almost a quarter of our GDP, right? So 1% is enormous. You had some really intriguing plans, like your 10% plan. Maybe you could tell the audience a bit more about it and where that is going.
--:-- Mark Cuban: It was an intriguing idea. As I mentioned earlier, when the Republicans came in and were talking about getting rid of the ACA, I asked the question, what next? So I started talking to people. Single payer is tough because it's almost like the ability of kids to always be able to get a loan for school. When you have the ability to always get a loan, the universities have no reason to tamp down tuition or costs. You can always borrow. And guess what? Costs go up really fast. And that's the same problem with single-payer health care. One, with the government funding, all the providers are going to see it coming, and the government's not a great negotiator. And two, when you read any of the single payer proposals for legislation, they always put the head of HHS in charge of it. And that's a political position. So you can see every four years, it would just be really, really tough.
--:-- So what I thought was, to paraphrase somebody — and I shouldn't paraphrase as a capitalist — "from each according to his ability to pay." That doesn't sound like capitalism to me.
--:-- Host (Olivia Webb): No.
--:-- Mark Cuban: I mean, but sometimes capitalism should be compassionate. I should be able to pay full freight. And somebody who is under 2x the federal poverty level shouldn't pay anything at all. And that was the genesis of the 10 plan. But then who would pay for it? I would pay for all of mine. You would pay for all of yours. Somebody who's under the two times the federal poverty level would pay none. And then it would be graduated on a means-tested basis. So if you made 220% of the federal poverty level, you might pay 2% of the bill. And then the balance would be paid by the federal government.
--:-- It would accomplish a couple of things from the provider end. If every hospital bill is paid for, that cuts administration costs and results in less dish payments and all these other things. Their malpractice insurance is paid for. And then the third one was it would be at Medicare rates. So anybody who would use this program would pay at Medicare rates. When you netted it out, it saved like $17 billion a year or something. I forget the exact number. It would have been nice, but getting it implemented... I went to D.C. and it was no chance. But I learned a lot.
--:-- Host (Olivia Webb): Is there any optimism you have for what's going to happen in politics or health care?
--:-- Host (Olivia Webb): Anything? No?
--:-- Host (Olivia Webb): Are you saying that there's no hope for government and so therefore we have to do it ourselves?
--:-- Mark Cuban: No. I was thinking a week ago, I talked to a bunch of people actually via the White House at CMS and the CMS Innovation Center who are very receptive. And I'm trying to get them on the concept, particularly with medications, of just absolute pricing. I'm talking about pharmacy pricing. There's wholesale acquisition costs. There's wholesale average costs. There's the NADAC. There's ASP. There's all these other things that the PBMs use to say, "Well, if my retail price is way up here, then I give you a 70% discount." That sure sounds nice. But the problem is it's an inflated, invented number, and it only looks good to people who really haven't looked at absolute dollars. Because prior to Cost Plus Drugs, there was no publishing of pricing. So they had no way to refer it. I've tried to get them to say, let's just work from absolute pricing.
--:-- Perhaps those are the first real market forces we need to have as foundations. You apply the same thing to hospitals and providers. You have to come out with your actual costs, and here's how you have to define how you burden those costs. You burden your fixed costs according to every service that you offer. Because one of the things as I was working on the template, I had somebody put together a comparison between a big Toronto hospital, as best we could, and a big New York City hospital. Real estate is more expensive in Toronto. Doctors and nurses get paid the same. Band-Aids cost the same. Why is it that the top 35 procedures in Toronto, in many cases, were less than our Medicare pricing a couple years ago? It makes no sense. But then you start to realize Canada pays for malpractice insurance. Canada makes sure that every bill is paid. There are times when you're going to have to wait, so things have to be scheduled. There's not the ability for someone just to come in and overpay to get something. But there was no multi-pricing within a province by an insurance company.
--:-- There are ways to get there, but it comes down to, like in Canada, they make a presentation to the province: here's my cost, here's what I need. There's none of that transparency in the United States of America. You couldn't go to any hospital that gets money from the government for anything and say, what are your actual costs down to each line item? I haven't seen it if it's there.
--:-- Host (Olivia Webb): No, you're right there. So one of the questions that's been fun to ask our guests is what you do for your own health. I don't know if it's working out, supplements, meditation. What's important to you?
--:-- Mark Cuban: First of all, I write down everything I eat. You can go to MyFitnessPal and my username is Mark Cuban. So if you want to see what I eat, you can follow me there. Two, I try to work out. I take this cardio fitness class right now that's kicking my ass, but I've been in the best shape I've been in 15 years. So I do that. I play basketball. I'll relax with my family. But I'm 64 years old now. I either got to do it or it's going to do me.
--:-- In terms of supplements, I only do the things that I know I feel impact my body. I've tried this and that and this, but I know I get restless legs at night, so I take magnesium. I know I'm a vegetarian, so I take an iron supplement and eat a lot of Total cereal because it has iron in it. I'll take melatonin if I'm not sleeping well. I don't do the NADs and this and that to try to increase the size of my telomeres. I'm still not involved in all that.
--:-- Host (Olivia Webb): Fair enough. No young blood.
--:-- Mark Cuban: No young blood.
--:-- Host (Olivia Webb): No young blood. I'm kidding. Absolutely kidding.
--:-- Mark Cuban: Yeah, yeah.
--:-- Host (Olivia Webb): So three quick lightning questions, and I think they'll take us home. First off, of all the businesses you've bought and run, what's your favorite?
--:-- Mark Cuban: This one. Broadcast.com at the time was amazing because we started the streaming industry. Nobody knew what it was. And people's eyes would just bug out every time they could listen to something they never had access to before. But when people walk up to you on the streets that just start hugging you and crying because now their mom or themselves or their granddad can now afford their medications... That's why this is the only company I've ever put my name on, and that's why.
--:-- Host (Olivia Webb): Great. Who annoys you more, PBMs or NBA officials?
--:-- Mark Cuban: NBA officials. At least I know what PBMs are doing or why PBMs do what they do. They're just trying to make as much money. They're all public companies, right? Get that stock price up. NBA officials, I haven't been able to understand it for 23 years. It's cost me a lot of money.
--:-- Host (Olivia Webb): I can imagine. And last one, and this might be a hard one for you. Imagine we're in 2040 and you're looking back. Who's had the better career, Luka or Dirk?
--:-- Mark Cuban: Oh, my goodness. I think Luka has the ability to have a better career because he can rack up assists. But hopefully they mirror each other — championship or multiple championships in 21 years with the Dallas Mavericks.
--:-- Host (Olivia Webb): Mark Cuban, thank you so much for joining us.
--:-- Mark Cuban: Thanks, BJ. And I'll just say it again. Please go to costplusdrugs.com. Put in the name of the medication you take or somebody you know takes. We don't spend any money on marketing. It's all word of mouth. So please check it out. I know we can save you money. Thank you for joining BioEats World.
--:-- Host (Olivia Webb): BioEats World is hosted and produced by me, Olivia Webb, with the help of the bio and health team at a16z and edited by Phil Hegseth. BioEats World is part of the a16z podcast network. If you have questions about the episode or want to suggest topics for a future episode, please email BioEatsWorld at a16z.com. Last but not least, if you're enjoying BioEats World, please leave us a rating and review wherever you listen to podcasts.
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