Mark Cuban has something to say about prescription drug prices.
The billionaire entrepreneur and Dallas Mavericks owner might not seem like an obvious participant in the pharmaceutical debate. But he is a prolific businessman with an established interest in health care and a reputation for blunt talk. He touched off a bit of a controversy last year when he urged people to get quarterly blood tests if they could afford it.
This week, the star of “Shark Tank” tweeted a link to a Harvard Business Review article that examined price-gouging by some drug companies, particularly with treatments for rare diseases, and what could be done to stop it.
It's time to bring drug pricing under control. Empathy arbitrage can not be a pricing strategy https://t.co/qp3xAM3RYh
— Mark Cuban (@mcuban) July 11, 2016
STAT asked Cuban by email for an interview to discuss why he was interested in the topic and what he thought should be done.
“I’m all for capitalism at its purest, but it requires capitalists acting like human beings first,” he wrote back. “If they don’t, the cost of health care goes up for everyone to the point where we can’t afford insurance and people die or receive inadequate care.”
“There is humane capitalism and inhumane capitalism. When capitalists act humanely, markets are optimally laissez faire,” he continued. “When capitalists act inhumanly, the only real response is government regulation, which damages markets and increased costs across the board.”
Cuban agreed to answer a few follow-up questions by email. The exchange, with some light editing, is below.
Housekeeping question: How much have you followed the drug price debate (Shkreli, Valeant, etc.) outside this HBR piece?
Not in-depth. But I have followed the health care debate closely.
You describe yourself as a pure capitalist, but you’re identifying a market failure here. Do you think it’s too late for the market to correct itself? Is there anything to do besides appealing to empathy?
It’s not too late. But it will take shareholders, insurance companies, and the public pressuring the companies through their local politicians via the threat of legislation that could seriously limit their profitability and even existence.
Bad actors don’t typically respond to requests for empathy. But they do respond to the threat of having their margins eliminated through caps and other limits like those proposed in the article.
Are you going to do anything about it? I know you have some health care companies in your portfolio. Could you see yourself entering the pharmaceutical space?
I know in general you’re interested in personalized medicine and what’s next in health care tech. How meaningful is that progress if we have these amazing advancements, but regular people can’t take advantage because of a prohibitive price?
The game will change from pills and potions to other types of solutions. But that’s not in the immediate future for the vast majority of people.
You’ve stoked speculation about your interest in public office — if you were in government, what would you do about drug prices and the problem you’ve identified?
Again, I’m not an expert. But some things come to mind:
I would recognize that the threat of less investment into pharma is a red herring. There are billions that can be made by investing in pharma and that won’t go away. Ever. So the investment will be there. There is room to make the type of changes suggested in the article and others that would reduce the cost of medications.
One other would be that government issued exclusivities would include extensions of those drugs. I don’t think it will be too far in the future until machine learning is able to convey the possible derivatives of a given drug and include them in the patent rather than as a new patent, which should reduce costs of drugs and the gaming of the system by some bad actors.
How can you be so sure that some of these ideas to address prices won’t hurt R&D?
Because how else are they going to make money? Do you think a public company CEO is just going to walk away from making money?
Are scientists going to stop being scientists?
This is how they make their money. They will be smarter about how they spend their money, but they can’t stop spending because it means they won’t make as much.