The pharmacy wars get interesting: what Cost Plus Drugs and Centerwell could build together

DISCLAIMER: The views and opinions expressed in this essay are my own and do not reflect the views, opinions, or positions of my employer.

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ABSTRACT

Mark Cuban’s Cost Plus Drug Company (MCCPDC) and Humana’s CenterWell are reportedly exploring a partnership to tackle employer drug costs, creating what could be one of the more interesting combinations in healthcare’s rapidly evolving pharmacy landscape. This essay examines the strategic rationale behind such a partnership, the potential operational models they might pursue, and the implications for the broader healthcare market. The analysis draws on publicly available data about both organizations, patterns from recent pharmacy market consolidation, and the underlying economics that make this partnership particularly compelling. For angel investors, this partnership represents a case study in how vertical integration and transparent pricing models are reshaping healthcare delivery, potentially creating both direct investment opportunities and valuable pattern recognition for evaluating portfolio companies.

TABLE OF CONTENTS

The Players and Their Positioning

Why This Partnership Makes Strategic Sense Now

Potential Partnership Models and Structures

The Economics That Make This Work

Market Implications and Competitive Response

Investment Themes and Opportunities

Risks and Obstacles

What This Means for Healthcare Entrepreneurs

The Players and Their Positioning

Before we dive into speculation about what this partnership might look like, it helps to understand where both organizations sit in the current healthcare landscape and what assets they bring to the table. Cost Plus Drugs has become something of a darling in the pharmacy world by doing something genuinely novel, which is being transparent about their pricing. Their model is straightforward to the point of being almost naive: they take the actual acquisition cost of a drug, add a fifteen percent markup, add a pharmacy dispensing fee of either three or five dollars depending on whether it’s generic or brand, and add shipping. That’s it. No rebate games, no spread pricing, no formulary shenanigans. For a lot of medications, especially generic specialty drugs, this results in prices that are seventy to ninety percent lower than what patients typically pay even with insurance.

The company started with a direct-to-consumer model in 2022 and quickly demonstrated that there was massive latent demand for this kind of pricing transparency. They’ve since expanded into the employer market through partnerships with PBMs and benefit consultants, but they’re still relatively small compared to the major pharmacy chains. According to their own reporting, they’re doing somewhere in the neighborhood of a few hundred million in annual revenue, which sounds impressive until you remember that CVS Health does over three hundred billion. They manufacture some of their own generics now, which gives them even better unit economics on high-volume products, and they’ve been gradually building out their capabilities to serve more complex patient populations.

CenterWell, on the other hand, is Humana’s primary care and senior-focused services brand. This is where Humana has been consolidating its provider-facing assets, including their owned and operated senior-focused primary care centers, their home health services, their behavioral health capabilities, and importantly for this discussion, their pharmacy operations. Humana’s pharmacy business is substantial, doing north of twenty-five billion in annual revenue through their PBM and specialty pharmacy operations. They serve both their own Medicare Advantage members and external clients. The CenterWell brand represents Humana’s broader strategy of vertical integration, trying to control more of the care delivery and pharmacy supply chain to manage medical costs and improve outcomes for their predominantly senior population.

What makes CenterWell particularly interesting as a partner for Cost Plus is their footprint. Humana has around five million Medicare Advantage members and CenterWell operates several hundred primary care centers concentrated in markets with high MA penetration. These centers are designed to serve seniors who often have complex medication regimens, multiple chronic conditions, and high pharmacy spend. The centers are capitated, meaning CenterWell gets paid a fixed amount per member per month and then has to manage all the care within that budget. Pharmacy costs are a huge component of total cost of care for seniors, so any intervention that meaningfully reduces drug spend while maintaining adherence is incredibly valuable to the CenterWell economic model.

Why This Partnership Makes Strategic Sense Now