Cost Plus Pharmacy

How It Works

The cost-plus model was popularized by Mark Cuban Cost Plus Drugs, which launched in 2022 and has since expanded to hundreds of generic medications. Instead of the opaque pricing chain (manufacturer → wholesaler → PBM → pharmacy → patient), cost-plus pharmacies show exactly what they paid for the drug and add a transparent markup. For many generic drugs, cost-plus prices are dramatically lower than what patients pay through insurance, especially for those with high deductibles. The model works best for generic drugs where acquisition costs are well-established. It's less applicable to brand-name drugs where list prices, rebates, and formulary negotiations dominate.

Related Terms

• Pharmacy Benefit Manager (PBM) — A company that acts as a middleman between drug manufacturers, insurers, and pharmacies — negotiating drug prices, managing formularies, and processing claims.
• Generic Drug — A medication that contains the same active ingredient, dosage, and form as a brand-name drug, approved after the original's patent expires — typically costing 80-95% less.
• Out-of-Pocket Cost — The amount a patient pays directly for a prescription drug — including copays, coinsurance, and deductible payments.