Mark Cuban ventures into the world of branded drugs

Mark Cuban Cost Plus Drug Company is now selling three brand-name drugs made by the Janssen Pharmaceuticals unit at Johnson and Johnson (J&J)—diabetes drugs Invokana, Invokamet, and Invokamet XR, announced in an April 3 tweet.

While other drug companies have made similar moves to sell cheaper versions of branded drugs in the past, it appears the deal with Cost Plus, where the original drug is sold at a steep discount, is unique, Antonio Ciaccia, CEO of drug pricing nonprofit 46brooklyn Research and president of consulting firm 3 Axis Advisors, told Healthcare Brew.

Since launching in January 2022, Cost Plus has focused solely on generic drugs and sells about 1,000 generics. The company started its foray into branded drugs in March 2023 to dispense Tirosint, a synthetic hormone used to treat hypothyroidism, through an agreement with IBSA Pharma. Tirosint is one of the most commonly dispensed prescriptions in the US, with about 99 million prescriptions in 2020.

But the Janssen deal is a much bigger move from Cost Plus, as Invokana has made headlines for years for its inflated prices, he said.

Buying Invokana from a pharmacy usually costs about $640 per month. Cost Plus is selling a month’s supply for $243.09.

Why hasn’t Cuban offered branded drugs before?

Some critics have pointed to Cost Plus’s lack of brand-name drugs in the past, but breaking into the branded drugs market can be a lot more expensive than offering generic drugs.

With generics, drugmakers have to compete with each other on price. That means they can’t hike the prices too much or else they’ll lose out to their competitors. Companies like Cost Plus can buy the drugs more easily since they’re significantly cheaper than branded drugs.

With branded drugs, drugmakers get patents that let them be the only company making that drug, allowing them to “charge whatever the market will bear,” Ciaccia said.

Drugmakers are incentivized to give rebates to pharmacy benefit managers (PBMs) for the drugs, because PBMs can place them on formularies, which means insurers will cover the drugs and they’ll be prescribed more often (i.e., more sales). But there’s no incentive for drugmakers to give similar rebates to pharmacies, because they’d get less money and nothing in return.

Why Cost Plus?

So then, why would J&J want to give Cost Plus a discount? It could help the drugmaker boost declining Invokana sales.

Copay caps have shaken up the diabetes drug market, and new drugs like Ozempic and Wegovy are “bound to start taking utilization from traditional [diabetes] medicines,” said Ciaccia. Plus, Invokana’s patent expires in 2024, so it’s going to face generic competition soon.

All of these things could cause a steep decline in sales for Invokana.

Giving patients a significant discount on the drug could help make up for some of those sales losses. Cost Plus also has a pretty big patient base, with roughly 2 million customers, giving Janssen the potential to make a lot of sales.

And don’t be shocked to see other drugmakers make similar deals with Cost Plus down the road.

“No question about it, other drugmakers are going to start watching this to see how it goes,” said Ciaccia. “I would predict that there will be other drugmakers that will do this, regardless of how Invokana works out for J&J.”

Cost Plus did not return Healthcare Brew’s request for comment.