In December 2025, Mark Cuban suggested that the US government overhaul how it typically funds military pharmacies. The model shifted from a web of middleman payments to a cash-price, direct-pay model.
Cuban emphasized that pharmacies delivering to military personnel can be compensated at the standard cash rate. Further, this reduces or cuts off the fees paid to the middlemen, like pharmacy benefit managers (PBMs)
In today’s world, where drug costs continue to increase, this type of shift is highly significant. This transformation helps reduce the overall healthcare spending across the country. It could also deliver savings to taxpayers.
Cuban’s pharmacy supply chain suggestion isn’t just a twist; instead, it is a critique of how prescriptions are reimbursed in a government-sponsored system.
However, to understand the large-scale impact, it’s essential to understand the context, including the challenges, alternative models, and how prescriptions are priced.
The Traditional Prescription Pipeline: Why It Drives Up Costs
A traditional prescription model starts with manufacturers, distributors, wholesalers, pharmacy benefit managers, and pharmacies, and ends with patients.
As a result, the conventional policies and arrangements involve a tangled network of players, whether for civilians, government beneficiaries, or private-sector employees.
During this conventional process, layers are added at every step, including markup, administrative fees, contracts, and rebates. Especially, the prices of medications get inflated, which rarely reflects the true cost.
Consequently, hidden discounts, spread pricing, and rebate schemes make it challenging for patients, employers, and even the government to understand what is being paid.
This web of complexity and opacity in the recent system can lead to massive inefficiencies, particularly for the military, which in turn benefits the millions of veterans and active-duty members. The aftermath would include unpredictable costs, wasteful resource allocation, and overall spending.
Henceforth, the conventional system has incentives that do not prioritize a minimum-cost structure, especially when intermediaries are involved.
The Alternative: Transparent and Direct-Pay
Cost Plus Drugs, founded in 2022 by billionaire entrepreneur and investor Mark Cuban, directly challenges the conventional pharmaceutical cost system.
The company set out to purchase drugs directly from manufacturers, completely cutting off the middlemen. They will then sell the medications to patients at transparent prices, including a fixed margin, very modest fees, and other costs.
Besides, CPD’s pharmaceutical supply chain model allows customers to check the actual price, which is the amount CPD pays for purchasing the product. Despite their unique model, the company applied a fixed 15% markup, plus a pharmacy fee that covers shipping and mail delivery.
Unlike the conventional process, Cost Plus Drugs does not hide any fees and keeps no secret contracts. This can result in substantial savings for patients who are uninsured, underinsured, or with high co-pays.
As can be seen, Mark’s company has begun partnering with employers and pharmacy-benefit management companies that seek transparency. For example, firms like SmithRx and Truveris, which supported employers and helped in sourcing medications efficiently by collaborating with CPD.
Thus, this points towards the fact that transparent-pricing model and direct-sourcing can work effectively, not just for civilians.
What Cuban’s Military-Pharmacy Proposal Entails
According to the sources, Mark suggested that the government shift from a middleman approach to direct-pay at the standard cash price for pharmacies delivering to military personnel.
This will mean that, in the longer term, the government will pay pharmacies directly. Instead of routing those payments via PBMs, they will cut off or substantially reduce their share.
Moreover, the payments will be completely based on standard cash, like what a private customer would pay, rather than negotiated spread rates or inflated list prices.
This supply chain model would effectively resemble a transparent-pricing model, which is most likely similar to its civilian structure, applying it to military members, dependents, and veterans.
Furthermore, these supply chain models reduce overhead costs, offering better value for every dollar spent, given the volume of prescriptions for military beneficiaries.
Why This Could Be a Big Win for U.S. Healthcare Economics and Taxpayers
Let’s have a closer look at why it can be a win for US Healthcare and taxpayers.
1. Lower Per-Prescription Costs at Scale
If the volume of government-run prescriptions that military pharmacies process, multiplied by the millions of patients, it could touch significant national savings. This can result in a significant amount of national savings.
2. Better Budget Predictability & Fiscal Responsibility
For government agencies, paying a known cash price and modest fee per drug could make budgeting more predictable. That predictability is valuable when managing public funds and planning long-term healthcare provisioning.
3. Greater Equity and Access for Beneficiaries
Many military personnel, veterans, and their families may benefit from lower out-of-pocket costs or reduced co-pays. A transparent pricing model could make essential medications more affordable, especially for retired or lower-income beneficiaries.
5. A Potential Template for Broader Reform
If the model works for military pharmacies, it could serve as a template for other public healthcare systems.
Successfully proving transparency and savings at scale could put pressure on the broader healthcare system to reconsider traditional PBM-driven pricing models.
Challenges, Criticisms, and What Would Need to Happen for This to Work
Of course, the vision and idea of the retired Shark Tank investor is bold. However, like any other business, it also has its own challenges.
- Resistance from Stakeholders: Pharmacy benefit managers, middlemen, and wholesalers are standing on the verge of losing their revenue. Nevertheless, they can lobby, push back, and will attempt to protect the status quo.
- Infrastructure & Transition Costs: Any major transition requires restructuring of everything from scratch. For this reason, IT systems and supply-chain logistics will need huge upfront work.
- Ensuring Drug Supply & Quality: Sourcing these medications, relying on a cash-price model, ensuring the quality, this has to be worked with private companies. However, scaling it for a government-run system might present logistical issues.
- Regulatory & Contractual Complexity: If the method is implemented, government procurements most often involve audits, compliance, and regulations. Hence, using a new model needs more careful policy design.
Final Takeaway
When an entrepreneur and investor like Mark Cuban, with decades of experience disrupting drug pricing for civilians through Cost Plus Drugs, recommends applying similar principles to the government-run pharmacy systems, it should provoke curiosity. Also, it should spark a real debate.
Despite these challenges, the potential benefits make the proposal compelling, especially considering the waste and inefficiency.
