This week, lawmakers in the Texas state House brought in more than a dozen expert speakers to discuss how to make healthcare more affordable.
One of those experts was entrepreneur and billionaire Mark Cuban, whose Cost Plus Drugs company seeks to address affordability and access for critical medications and often comes into conflict with legacy players like pharmacy benefit managers.
At Tuesday's hearings, Cuban said that many of Cost Plus' customers are individuals with insurance coverage, which says a lot about the state of affordability even for people who are insured.
"They come to us because our cash price is often lower than what their insurance plan asks them to pay," Cuban said. "That tells you something is wrong."
He offered legislators five steps they could take to help mitigate the affordability crisis. For one, patients should be able to access drugs at the lowest possible cost, even if that's outside of their health plan, and there should be incentives in place for them to shop around.
For example, if a prescription costs $500 at the pharmacy counter through a patient's insurance but $100 through a platform like Cost Plus Drugs, they should be encouraged to take the lower cost, Cuban said. One way lawmakers can help make that possible is by allowing those cash pay expenses to count toward deductibles or out-of-pocket maximums.
"Patients should be rewarded for saving themselves and their health plan money. They shouldn't be punished for it," he said. "That's how you create something healthcare desperately needs: price competition."
In addition, lawmakers should introduce requirements around standardized contracts for both PBMs and third-party administrators. State lawmakers could implement standardized model contracts for state employees, cities, counties and school districts.
Health plan or PBM contracts can be hundreds of pages long, and it's easy for the insurer to include provisions that may be detrimental but go unnoticed given the sheer volume of the contract, Cuban said.
"I call it contractual terrorism," Cuban said.
The entrepreneur said he has developed a model contract on the PBM side that state lawmakers could work from as a template, or even offer as an open-source tool for other employers and contractors to work from.
"Just stop making every government entity negotiate these contracts from scratch," Cuban said. "It's a losing game for everybody."
Cuban continued that if taxpayers are going to be paying for healthcare in any capacity—such as the Medicare or Medicaid programs—then data on pricing needs to be public. That includes transparency into rebates, fees, affiliate compensation and any other guarantees.
He said that a market without "price discovery" cannot operate efficiently, because one player has far more information available to them than the others.
In a similar vein, Cuban's fourth recommendation is to eliminate gag clauses that may prevent employers or other plan sponsors from speaking more openly about their contracts. This would allow them to compare terms, fees and other elements, he said, which could lead them to more favorable contract negotiations in the future.
And finally, Cuban said that lawmakers need to make sure that enforcement truly packs a punch. For example, if a healthcare organization makes a significant violation of some kind for the first time, regulators could be lenient, he said. But a second issue should carry a far steeper penalty.
"Today, some of these companies can make billions, get caught, pay a fine, write it off more easily than I wrote off my NBA fines," Cuban said. "That's not deterrence. That's a cost of doing business for them, and Texas should spend more on enforcement."