Mar 5, 2024 · 25m · a16z
Sharks Never Stop Swimming: A Conversation with Mark Cuban
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this a16z American Dynamism keynote, entrepreneur Mark Cuban discusses his mission to disrupt the healthcare industry with Cost Plus Drugs, exposes predatory middleman practices, and shares insights on higher education and grass-roots entrepreneurship.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. How this is scored →
The host as informed peer 2.8 Guest teaching 6.5 Guest disagreement 3.2 The host pushing back 2.0
speaking balance: gold is the host, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 18:08 Cuban rejects host's defense of audience intelligence
When host Ulevitch defends the audience saying there are smart people in the room, Cuban flatly interrupts and disagrees, asserting that everyone, starting with himself, is stupid when it comes to healthcare.
Hardest push from the host ▶ 16:59 Host challenges CEO direct contracting feasibilityHost Ulevitch directly challenges Cuban's proposal that company CEOs should negotiate directly with local hospitals, questioning its practical feasibility and raising the necessity of insurance for catastrophic cases.
Biggest teaching moment ▶ 11:15 Cuban breaks down the hidden mechanics of PBM rebatesCuban educates the host and audience on how PBM rebate checks accepted by CFOs are actually funded by co-pays paid by the oldest and sickest employees with chronic conditions.
The host holds their own ▶ 21:00 Host cites Harvard GPA inflation statisticHost Ulevitch demonstrates his own knowledge by bringing up a specific metric regarding Harvard's average GPA increasing a full letter grade in fifteen years to support Cuban's critique of higher education.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The host as informed peer | Guest teaching | Guest disagreement | The host pushing back | Why |
|---|---|---|---|---|---|---|
| Opening Title and American Dynamism Montage | 2 | 6 | 1 | 1 | Host David Ulevitch introduces Mark Cuban and asks broad introductory questions about Cost Plus Drugs. Cuban takes full control, explaining how transparent pricing disrupts traditional drug markups like droxedopa moving from $10,000 to $50 a month. | |
| Cost Plus Wholesale and Scale Capture in Healthcare | 2 | 7 | 3 | 2 | Cuban interrupts the host mid-question to keep elaborating on how scale capture inflates costs. He educates the audience on cutting out employee benefit managers and paying cash rates ($475) versus insurance-negotiated hospital rates ($2,200). | |
| Exposing the Pharmacy Benefit Manager (PBM) Model | 2 | 8 | 4 | 1 | Cuban delivers an extended explanation of Pharmacy Benefit Managers (PBMs) and biosimilar drug pricing like Humira versus Usimri. He forcefully asserts that employer ignorance keeps the broken system afloat and explains how rebate checks trick CFOs. | |
| Government Policy, PBM Secrets, and Independent Pharmacies | 5 | 7 | 5 | 6 | Host Ulevitch presses Cuban on whether direct hospital negotiations are realistic for typical CEOs and brings up catastrophic care insurance. Cuban rejects the host's attempt to defend audience intelligence, declaring everyone ignorant on healthcare economics. | |
| Financing Cost Plus Drugs and Disrupting Higher Education | 4 | 6 | 3 | 1 | Cuban critiques higher education accreditation and building donations, while the host cites specific data about Harvard's average GPA rising a full grade point over 15 years to support the critique. | |
| Shark Tank Legacy and Celebrating American Entrepreneurship | 2 | 5 | 3 | 1 | Cuban corrected the host on the current season number of Shark Tank and explained the behind-the-scenes pitch dynamic regarding vanity pitches from elite universities, before finishing with a passionate defense of American entrepreneurship. |
Statements from this episode (18)
Cuban: Cost Plus Drugs carries roughly 2,450 medications
“We've got about 2450 right now, and that number's growing every day.”
Cuban: Cost Plus Drugs caps markup at 15% plus $10 fee
“You'll see that our markup is 15%. You'll see that if you buy a mail order from us, you'll pay 10 dollars for shipping and a pharmacy fee.”
Mark Cuban launches Cost Plus Wholesale to sell directly to hospitals
“We just started Cost Plus Wholesale, and because what was happening is we had Hospitals and others who couldn't buy at our pricing, at our retail pricing, and so now we're selling to them.”
Cuban saved 78% on a hospital bill by paying cash instead of insurance
“The insurance costs that they were gonna charge me, my insurance company that my employee benefits person supposedly had just negotiated a great rate, only a small increase, right, was gonna charge me 2200 dollars by paying with a credit card, it was 475.”
Cuban negotiates healthcare rates at 80-100% of Medicare versus insurance's 250-275%
“Now the typical network price negotiated by the big insurance companies is 275%, 250 to 275% of Medicare, Medicare rates. Price we're negotiating right now, 80 to a hundred percent of Medicare.”
Cost Plus Drugs captures 17% of cash mail-order market with $0 ad spend
“We think we have 17% at cost plus, 17% of the cash mail order market, and that's, you know, how much we've spent on marketing and advertising? Zero.”
Cuban: Three PBMs control 80% to 90% of the drug market
“And there are three of them that dominate the industry with 80, 90% market share.”
Cuban: PBMs exclude $700 biosimilar Usimri to protect drug margin revenues
“Humira is about 8000 dollars a month. Six to 8000 dollars a month. USIMRI is about 700 dollars a month. But they won't add USIMRI to their formularies because they don't want to use the revenue in the margin.”
Cuban: Corporate PBM rebates are subsidized by oldest and sickest employees
“Your oldest and sickest employees. Because they're the ones that have the co-pays, and they're the ones that use, that have the most chronic illnesses, and they're the ones that are subsidizing all those rebates.”
Cuban: Five Fortune 50 companies leaving major PBMs would force immediate systemic reform
“If five of the Fortune 50 companies walked away from the big three insurance companies and the big three PBMs, they'd have to change their business models, and immediately, immediately the entire healthcare system would change.”
Cuban: Cost Plus Drugs is the easiest business he has ever started
“Of all the businesses I've ever started in my entire life, this has been the easiest.”
Cuban: Big three PBMs pay independent pharmacies $0.50 for $12 scripts
“If you're dealing with one of those big three PBMs, it cost an independent pharmacy probably 12 dollars, give or take, on the location to fill a script. They're paying them 50 cents”
Cuban: Cost Plus Drugs will publish all network and operational data
“We'll be publishing everything we do. And so you'll be able to copy what we do and use the same networks, et cetera.”
Cuban: A $300k healthcare CFO pays for themselves 100x over
“That's why you pay two or 300,000 dollars for a healthcare CFO, they will pay for themselves a hundred times over.”
Cuban: Donor-funded university buildings drive up tuition costs
“You're why Tuition is going up. Because that's what colleges do, and those buildings have to eat, eat, eat, eat, eat, eat, eat every year, and then have to get replaced, and you have a, why do you need a sociology building, and a business school building, and …”
Cuban: I refuse to hire Harvard grads, preferring state school talent
“I don't. Give me Texas Tech and UC. Indiana, right?”