The Exchanges

Q So many generic drugs are made overseas. What, what's the biggest challenge in making them here? I mean, you, you have a facility now. It's taken you a couple years, but why is it so hard to do it in the U.S.?

A You know, that's a great question and a timely question. I'm glad you asked. Um, it's not hard for us to do because we're robotically driven. We can change the drug we're making in a four hour period, you know, so we can make a one month or one year supply of something, then roll it over to another drug. Our biggest inhibitor and why we haven't done it yet is all the fees that the FDA charges. So it's about 365,000 dollars to set up what's called an end on new drug application. And if you want to do it For a hundred drugs, that's 36 and a half million dollars. You want to do it for a thousand generics, you can do the math, right? And so because of that, that, that is what ruins the margins here in the United States. And so we can make generic pills here in the United States cheaper than what we can buy them for from India or China. We just have to deal with the associated costs of all the applications.

AI assessment note: “Our biggest inhibitor and why we haven't done it yet is all the fees”

Q Yeah. But was a technology, was a technology even there?

A No, it wasn't at that point. Um, but I figured I could figure it out. And we were, I was playing with NFS files and all this other stuff. And, you know, I went and bought, you know, a Packard Bell computer for three grand. Um, I set up an ISDN line at my house and just started playing and playing and playing and trying different things. And there were ways using wave files and stuff that you could transmit audio that had been done for a long time, but actually streaming it in over the internet in a more efficient manner that hadn't been done. So I set up a website and we called it audio net. And then we went to the local, a local radio station here in Dallas, KLIF. I went to him and I said, look, you know how cable TV is just blown up and now you can get any network anywhere you have a TV, uh, I think this internet thing is going to do the same thing for audio and eventually video that you're going to be able to stream things digitally all around the world. And we're going to really make the world a much smaller place and you can make your signal a much more global business. And here's what we need to do. I'm going to bring an eight hour VCR and we're going to record your Norm Hitzke's show and all this stuff, all your sports shows. And then I'm going to encode it and put it on audio net.

AI assessment note: “No, it wasn't at that point. Um, but I figured I could figure it”

Q Tell me, is that, is that what happened?

A Yes, absolutely. Believe it or not, I've probably invested over a hundred million dollars into people I've never met in my entire life from cold emails or cold calls or whatever it may be and done really well with those investments. Um, you know, and so Dr. Alex emailed me and he was a radiologist, you know, a mathematician, just one of the smartest humans I've ever met. And we started going back and forth about the ills of the drug and, and pharmaceutical industry. And he was working on starting a compounding pharmacy that would allow him to sell drugs for less, but would be in, in his, that particular case, more difficult to scale. And this is four years ago, give or take right around the, you know, when there were still discussions going on about the pharma bro.

AI assessment note: “Yes, absolutely. Believe it or not, I've probably invested over a hundred million dollars”

Q Um, in part because so much of it comes from overseas. I wonder if the same principle might apply to, to prescription drugs. I mean, is, is your kind of model, is the idea that it will force the, the manufacturers and all the middlemen, you know, it will force the market to essentially follow your lead?

A Yeah, it's interesting. It's a great question. So there's two pieces there. One in terms of manufacturing and putting the actual physical production costs and getting that lower, and the answer is yes. We're, you know, I mentioned we're spending a lot of money on a plant here in Dallas, and it's going to be driven by robotics so that we can go through and take any, a given pill, um, and manufacture one year or two years worth of supply Switch it over to another pill and do the same thing over a short period of time and push the cost of the production of that pill. Down below what we buy it today. And since everything we sell is cost plus 15%, that by definition will force the pricing down. And then the second part is as we grow and we compete, then they're going to have to respond to us. And my, my greatest fear is, you know, they're going to, they're going to be great lobbyists, you know, and try to, you know, push us out of business simply because of, What we're doing to their business. And I think without question, it will have an impact, but right now we're too small for them to care.

AI assessment note: “and the answer is yes... as we grow and we compete, then they're going to have to respond”

Q So what, what did you think you were gonna do down there?

A I had no idea. I had no idea. I figured worst case, I, I'd have fun. I, you know, I, I started a bar my senior year in college, so I knew how to bartend. Um, I understood the bar business, and so I figured worst case, I'd get a job working as a bartender, and then see what came along, and, and that's exactly what I did. I got a, a, a job at a place called Alon's working as a bartender, and, um, in the meantime, I would go through the Help Wanted ads. There was an ad in the local paper that said, come to This agency and we'll help you place. And I'm like, look, I'm not paying a fee. Um, and they get, they're like, no, the employer pays. Don't worry. So I got sent to a company called your business software and they started quizzing me and actually smart questions, but it was, you know, what do you know about PCs? And this was 1982 at this point.

AI assessment note: “I had no idea. I figured worst case, I, I'd have fun.”

Q How did you get people to hire you? How did you, and would you go door to door? Would you cold call?

A I would network. One success led to another, and so I went to a company called Architectural Lighting, who I'd been talking to, and I said, look, your software cost you 500 bucks. I don't have the money to, to buy it from the wholesaler. If you guys would advance me the money, I, I won't charge you anything to install it, and I promise you that I'll make it work, and if for some reason it doesn't, then I will re, You know, work for you or figure out a way to give you the money back. And they did, and it worked. And then I went to the next one, and the next one, and the next one. And you got to realize that, you know, my, my personality is such that I would start learning software, working on an application that I was writing, and I'd start working on it, and I'd look up, and it'd be 36 hours later.

AI assessment note: “I would network. One success led to another, and so I went to a company”

Q worth, like, you know, more than a billion dollars. Um, I want to ask you about, about the NBA, because you, uh, you get in a lot of trouble. Like, you have been fined a lot of money for, uh, for, like, yelling at the refs. So do you, I mean, do you cause trouble for fun, or do you, do you just do it because you like to fight?

A Um, just depends on the circumstance. If I'm playing pickup, or if I'm playing in a, in a league, I'm never arguing over calls or whatever. I never have. You know, if I'm in the league and there's a bad call, okay, that's the way it goes. You know, in the NBA, it's a lot different, particularly when I first got there. When I first got to the NBA, refs really worked at managing the game rather than calling the game by the rule book, and I remember early on reading something from the director of officiating back then who said, we don't call the game the, the Same in the last minute as we do in the first minute, which just infuriated me to no end. And then from there, it was just like, okay, I'm on a mission to, to make this fair. And it, it set me off with a lot of those guys and probably cost me a championship in 2006. But, um, you know, it's come a long way since. And I think, you know, I'm better for it and the NBA is better for it since.

AI assessment note: “it was just like, okay, I'm on a mission to, to make this fair.”

Q So how do you solve that? I mean, it sounds like this is a legislative solve, like you basically change the law.

A Well, actually, it's an FDA issue. You know, they have the opportunity to waive those fees, and we're talking to people in the FDA, and obviously, in this administration, they want to bring manufacturing back home. They want to prove that we can compete in manufacturing in the U.S. Hopefully, we'll get, you know, a positive response from the head of the FDA, because once they do that, It takes us about 12 months at the most to start turning everything on, and then there's no limit to what we can scale, and the reason we're able to do it so much more effectively is not only because of the AI and robotics we use, but because we did it on a modular basis. Literally, we can put all this stuff in a tractor-trailer and not only make it in Dallas, but take it wherever and manufacture the drugs as close as where they need to be.

AI assessment note: “Well, actually, it's an FDA issue. You know, they have the opportunity to waive”

Q how do you, how do you compartmentalize all these things? I mean, you're, you're invested in so many companies. You are part of many companies. You, you are obviously the owner of the Mavericks. You've got executives, you know, and managers who run a lot of these businesses. Um, so how do you kind of divide your time and, and, you know, stay focused on all of these different things?

A Now, I don't, I'm not really involved in day-to-day operations of anything. Um, You know, one of my faults has been, I trust to a fault. There's, there's been times when I've been taken advantage of, and I'm not happy about it, but you know, I've managed for the most part to, even if it's the result of learning from a mistake, find good people, let them do their job. And that by, by trusting them and allowing them to do their job, I get to do what I like to do, which is learn everything I can related to technology and kind of You know, speculate about where this can go, whether it's robotics, AI, personalized medicine, cryptocurrencies, whatever it may be, they all have a lot of the same logic underpinning them. And for me, learning all that stuff and staying up to speed and getting ahead and coming up with new ideas is fun for me.

AI assessment note: “I'm not really involved in day-to-day operations of anything... find good people”

Q here with Mark Cuban. We're talking about his new, uh, drug company, um, that is, is, is working to make drug prices much, much lower. Um, let's talk about manufacturing. So you're, you're investing in an actual facility, a plant that is going to make and manufacture drugs. How does it work? I mean, can, can this one plant, will it be able to, to make thousands of different Drugs?

A No, we won't be able to, you know, it's not going to turn out a billion dollars worth of drugs each and every year, but it's a starting point for us. And once we're able to establish enough volume, we'll be able to build another one, then another one, you know, across the country. Um, so no, this one facility will not be able to cover all the bases and all the volume, but, you know, let me take a step back. Our challenge to scale is not dependent on us building our own manufacturing facilities. Part of the challenge is getting manufacturers to sell to us because they're afraid of the response they'll get from the insurance companies. So if, and you know, they, they're, they have the ability to scale and push their costs down the same way we do. But they're afraid because imagine this scenario, um, you're a PBM that's part of a big insurance company, and you go to a branded manufacturer and you say, look, you know, if you sell to Cuban and his cost plus drugs, we're going to yank you off of all these hospitals that we buy for, and we're going to yank you from the formularies for that this insurance company that owns us approves. And so that's been our biggest hurdle. And when you hear all this talk about regulating prices of drugs, um, by different politicians, they're, they're not solving the problem. They're creating different problems. The reality is that the solution is, is …

AI assessment note: “No, we won't be able to, you know, it's not going to turn out”

Q And probably make some of it back, do you think?

A Yeah, I mean, could I be a billionaire? To be a billionaire, you got to get lucky, right? I started my company, you know, at a time when the stock market was going nuts, and that, that was my luck, and I was smart enough to do it, smart enough to run it, smart enough to execute on it, smart enough to hedge it, but no question, there was luck involved, and so, you know, could I become a multi-millionaire, millionaire again? I have no doubt, because I would work hard enough, and I, and look, and I don't mean that to sound disrespectful. There's a lot of people who work really hard, Um, but in sales, you know, knowing what my sales skills are, and the products that I'm able to sell, I think I could find a job selling a product that had enough commissions or rewards for me, and then leverage that up to start a company somewhere, somehow, um, and then, you know, build some wealth. Now, maybe not the same, but enough to pay the bills.

AI assessment note: “could I become a multi-millionaire, millionaire again? I have no doubt”

Q What is it about NFTs that, that you think is not just interesting, but potentially valuable?

A So there, there's a, there's a backstory there. You know, I'm a tech guy and I always have been. And so over the years I've, I've played, paid attention to and dabbled in and invested in cryptocurrencies at various levels. And about golly, it's December of 20, 20, January of 20, 21 now, you know, I was hearing about NFTs and I decided to, to learn some more about them. And so I went to a site, I think it was rarible.com and then another one, mintable.app. And I decided to mint some NFTs. I just wanted to go through the process to learn. And I was, as I was doing it, it's, it's a very simple process where I was filling in a form. And one of the questions that asked was what would I like the royalties to be? And I was like, wait, what? Royalties? You know, I can create this digital asset, and if it's resold time and time again, I'll continue to get paid. That, as a business person and tech guy, lit a fuse for me, and I was like, ok, this is different. This isn't just, ok, a digital version of baseball cards, let's just buy and sell them. What enables this to happen? And as I dug into it, I realized it was something called a smart contract and that the underpinning of all NFTs are these things on Ethereum or Ethereum compatible blockchains called smart contracts.

AI assessment note: “I can create this digital asset, and if it's resold time and time again”

Q Hmm. And so right now, um, essentially these vertically integrated companies are maybe not yet, but eventually they're going to start telling manufacturers they cannot sell to companies like you because you are not willing to work with insurance companies, right?

A It's not that we're not willing to work with insurance companies. We're just not going to put ourselves in a position where we have to distort our prices. You know, our mission is very, very simple. If you go to costplusdrugs.com, you're not going to see bells and whistles. It's very simple. There's not going to be dealt telehealth. There's not going to be big name doctors writing articles and blog posts and podcasts. None of that at all. Our mission is very straightforward. We want to be the low cost provider of every drug we sell. And with that definition, we can't work with an insurance company that Is going to require rebates or anything like that. And that's part of what distorts pricing. Now, not all insurance companies do that. There are some that have come to us and said, we want to work with you, right? We're not, we don't own a pharmacy chain. We don't own hospitals. We don't own pharmacy benefit managers. So we want to work with you. So not all insurance companies are bad guys. Not even all PBMs are bad guys. There's just a few that really have the most power That initiate the distortion in pricing.

AI assessment note: “It's not that we're not willing to work with insurance companies.”

Q Mark, um, is this a, is this a business that you think you would go out and raise money for eventually? I mean, you've got your own money, but you couldn't, even with your money, you couldn't finance a massive drug company.

A You know, I, I, I haven't so far. This is kind of like the one thing I've said, okay, sorry kids. You know, your inheritance is going to maybe reduced if it doesn't work. Um, just because it's that important to me. I, you know, you've heard me say I'm the luckiest guy in the world financially, and I've been incredibly blessed. I try not to take it for granted. And this is a chance, you know, to have Alex reach out to me and to have him be as smart and as good at his job. As he is, and another gentleman, Ryan Klein, and the people they've hired, they're, you know, I might write the checks and I might be involved strategically, but they make it run day to day to day to day. And while it's a big check, and it's a lot of them, um, the impact is so great, that's worth more to me than the money.

AI assessment note: “I haven't so far. This is kind of like the one thing I've said”