Billionaire entrepreneur Mark Cuban, in a series of posts on the social media platform X early Monday morning, launched a scathing critique of the U.S. prescription drug industry, accusing large wholesalers and Pharmacy Benefit Managers (PBMs) of creating a “stranglehold” on pricing through opaque, anti-competitive practices.
Cuban detailed a system designed to force pharmacies into near-exclusive purchasing agreements, ultimately inflating costs for consumers.
Rebate Schemes That Inflate Your Drug Costs
The critique began with a response to Rep. Jake Auchincloss (D-Mass.), who had compared the bizarre world of drug pricing to buying a $7 bagel in one store and a $400 one across the street. Expanding on the analogy, Cuban explained the coercive mechanics behind the price disparity.
He described how a pharmacy is forced to buy a product for a grossly inflated list price, like “$400,” from a major wholesaler, only to receive rebates that bring their actual cost down to a reasonable number, such as “$7.”
The catch, Cuban revealed, is that these rebates are contingent on exclusivity. “They can only do if they buy 90 plus percent of their generic bagels from their big primary wholesaler,” he wrote.
If a pharmacy attempts to source cheaper generics elsewhere—like from his own company, Cost Plus Drugs—they are hit with “chargebacks and fees that wipe out any chance of making money.”
See Also: Mark Cuban Urges Gen Z To Seize AI Job Opportunities: ‘Learn All You Can About AI’
How Big Pharma Forces Pharmacies Into Exclusive Deals
In a subsequent post, Cuban argued this system was intentionally built to be “opaque, complicated and incestuous,” allowing a few massive companies to gain all the “leverage.”
He asserted that this consolidation has created a market where hospitals and clinics are completely dependent on these giants for revenue and patient flow.
For the average person, the result is a system that is impossible to navigate. “And of course patients have no chance of navigating all of this,” Cuban stated.
“Whether you get your insurance at work or Medicare or the ACA or direct, you have no equity. No chance of standing up.”
He concluded his assessment by calling the entire structure “the most upside down bizarre business I have ever seen.”
Price Action
Here is a list of the firms that operate PBMs and a few pharma exchange-traded funds for investors to consider.
| Stocks | YTD Performance | One Year Performance |
| CVS Health Corp. (NYSE:CVS) | 66.85% | 30.65% |
| Cigna Group. (NYSE:CI) | 11.23% | -14.62% |
| UnitedHealth Group Inc. (NYSE:UNH) | -37.49% | -46.91% |
| Pharma ETFs | YTD Performance | One Year Performance |
| VanEck Pharmaceutical ETF (NASDAQ:PPH) | 3.12% | -8.27% |
| iShares US Pharmaceuticals ETF (NYSE:IHE) | 8.69% | 0.44% |
| Invesco Pharmaceuticals ETF (NYSE:PJP) | 11.89% | 7.66% |
| SPDR S&P Pharmaceuticals ETF (NYSE:XPH) | 12.22% | 10.30% |
| KraneShares MSCI All China Health Care Index ETF (NYSE:KURE) | 54.51% | 59.09% |
| First Trust Nasdaq Pharmaceuticals ETF (NASDAQ:FTXH) | 4.42% | -2.20% |
| Direxion Daily Pharmaceutical & Medical (NYSE:PILL) | 16.28% | 4.67% |
The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, ended mixed on Friday. The SPY was down 0.29% at $647.24, while the QQQ advanced 0.14 to $576.06, according to Benzinga Pro data.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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