Mark Cuban Says Cutting PBM Fees Won't Reduce Pharmaceutical R&D Funding: 'Manufacturers Can Sell To Us For More'

In a strong rebuttal to concerns over pharmaceutical innovation, billionaire Mark Cuban, co-founder of Cost Plus Drugs and Shark Tank fame, argued that slashing pharmacy benefit manager (PBM) fees could paradoxically increase research and development (R&D) funding by allowing manufacturers to earn more.

What Happened: Cuban asserts that brands can earn more by selling directly to his cost-plus model, bypassing the “insane fees” and rebates charged by PBMs.

This statement, replying to a query from Parvenu Capital, challenges the long-standing narrative that high U.S. drug prices are essential to sustain R&D.

According to Parvenu Capital, the U.S. shoulders 60-70% of global pharma R&D costs, with only 12% of drugs reaching the market, suggesting current prices amortize failed projects. Thus, the U.S. drugs have higher prices.

Cuban counters that PBMs siphon off profits through rebates and fees, leaving manufacturers with less for R&D. By selling to Cost Plus Drugs at higher net returns, he claims, companies could reinvest more into innovation.

Actually the PBMs charge not only rebates , but also insane fees. So the brand manufacturers can sell to us for MORE than they get paid by he PBMs. So they will have MORE money for R&D https://t.co/xYugLRhChN

— Mark Cuban (@mcuban) August 1, 2025

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Why It Matters: Supporting this, a 2021 Congressional Budget Office report indicates that global sales offset U.S. R&D expenses, hinting that lower domestic prices might shift costs elsewhere without stalling progress.

Cuban's model, offering generic Entresto, used to treat heart failure, at just $33.75, exemplifies this shift, contrasting sharply with U.S. prices nearing $600 monthly versus OECD averages of $180.

As the debate unfolds, Cuban calls for dismantling PBM barriers, promising a future where transparency drives both affordability and innovation.

The Dallas Mavericks owner has been a PBM critic for a long time. He has said "PBMs corrupt healthcare," explaining that these intermediaries control formularies and manipulate prices to maximize rebate revenue, with three major PBMs negotiating over 90% of rebates for commercial insurance plans.

These groups, he says, act as middlemen, controlling not just the costs but also the accessibility of care. He blames PBMs for lack of transparency, inflated specialty drug prices, rebate distortion, formulary restrictions, and "Sh–ing on" independent pharmacies.

Price Acton: Some significant firms engaged in the PBM business listed in the U.S. include;

Stocks	YTD Performance	One Year Performance
CVS Health Corp. (NYSE:CVS)	40.43%	3.45%
Cigna Group. (NYSE:CI)	-2.59%	-19.61%
UnitedHealth Group Inc. (NYSE:UNH)	-50.53%	-56.43%

Meanwhile, here is how some pharmaceutical sector ETFs have performed;

Pharma ETFs	YTD Performance	One Year Performance
VanEck Pharmaceutical ETF (NASDAQ:PPH)	-3.95%	-12.22%
iShares US Pharmaceuticals ETF (NYSE:IHE)	0.20%	-4.85%
Invesco Pharmaceuticals ETF (NYSE:PJP)	-2.74%	-6.70%
SPDR S&P Pharmaceuticals ETF (NYSE:XPH)	-3.40%	-4.43%
KraneShares MSCI All China Health Care Index ETF (NYSE:KURE)	41.31%	46.60%
First Trust Nasdaq Pharmaceuticals ETF (NASDAQ:FTXH)	-3.92%	-10.01%
Direxion Daily Pharmaceutical & Medical (NYSE:PILL)	-22.91%	-31.06%

Price Action: The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, declined on Thursday. The SPY was down 0.38% at $632.08, while the QQQ declined 0.53% to $565.01, according to Benzinga Pro data.

On Friday, the futures of the Dow Jones, S&P 500, and Nasdaq 100 indices were trading lower.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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