The Hopkins Business of Health Initiative Graduate Academy gives Johns Hopkins master’s students sustained access to one of the country’s most active interdisciplinary health research networks. Fellowship comes with faculty mentorship, hands-on engagement with HBHI’s research portfolio, and a seat at the table for HBHI’s D.C. convenings at the Hopkins Bloomberg Center, where fellows hear directly from leaders shaping the field.
That access is part of the education that happens outside the classroom. Fellows test their thinking in the room, ask the speakers questions, and form their own views on the questions animating the future of the business of health.
On December 16, 2025, Mark Cuban, Bill Gurley, and Optum CEO Patrick Conway joined Johns Hopkins faculty and students at the Johns Hopkins Bloomberg Center in Washington, D.C., for Entrepreneurship and Healthcare Innovation, a forum on careers, entrepreneurship, and the future of U.S. healthcare hosted by HBHI core faculty Steven D. Cohen and Ge Bai. Three HBHI fellows took the floor in a packed theater with a question for the speakers: Bonnie Koo, James Buchanan, and Kadamb Gupta. James’s exchange on price transparency is featured in a separate Graduate Academy spotlight. Below, Bonnie reflects on what she took away, and Kadamb develops his question into a full commentary on pharmacy benefit managers.
A Reflection From
Bonnie Koo
2026 Graduate Academy Fellow, MPH/MBA Candidate
“As an HBHI fellow, I am dedicated to understanding the underlying business models and financial incentives present in healthcare actors — industry, venture capital, payers, and providers — that drive both desired and undesired health outcomes. At the health innovation event, I wanted to understand how decisions get made when selecting innovation ideas with incomplete information, and the inevitable regret that could follow. The takeaway: surround yourself with people with different perspectives, but accept that you will never really know.”
“I also noticed the recurring tension between ‘healthcare is complex for a reason’ and ‘why does it have to be so complex?’ that often plays out between health incumbents and innovators. Innovators enter as the solution and later become part of the problem. My conclusion is that there is no single right answer. The tension will persist, but it should not prevent us from questioning the status quo or maintaining awareness of systems thinking.”
The conversations between Cuban, Gurley, and Conway on pharmacy benefit managers prompted Kadamb to write the commentary that follows.
Featured Commentary From
Kadamb Gupta
2026 Graduate Academy Fellow, MBA Candidate
PBMs: The Convenient Scapegoat in a Broken System
The high-profile conversations earlier this year between Bill Gurley, Mark Cuban, and Patrick Conway on pharmacy benefit managers (PBMs) have reignited public debate about one of healthcare's most opaque stakeholders. These exchanges are valuable, but they leave critical historical context on the table, and in doing so, risk producing incomplete future solutions to a structural problem.
The Origins of a Structural Fault Line
For much of the 20th century, PBMs had a straightforward mandate: process pharmacy claims. As specialty and brand-name drug costs began rising sharply through the late 1980s and 1990s, PBMs, already sitting atop a wealth of claims data, became the natural candidates to identify cost drivers and design cost containment strategies. Formularies were developed as a tool to serve the cost containment strategies. PBMs used the formularies to compare therapeutic alternatives and steer prescribing toward more cost-effective options.
Here is where the fault line formed. The convergence of formulary decision-making authority and claims processing power, operating under minimal payer oversight, created fertile ground for misaligned incentives. But PBMs did not engineer this position unilaterally. Payers and administrative services organizations ceded strategic control without building in accountability mechanisms. Had they retained oversight of even strategy design or implementation, the current dysfunction may never have taken root.
It is worth acknowledging what PBMs got right. Their ability to mine claims data and leverage it in rebate negotiations with manufacturers demonstrated both analytical sophistication and the existence of real slack in manufacturer pricing. That negotiating function had genuine value. Its corruption does not erase that fact.
What the Cuban Critique Misses
Mark Cuban's Cost Plus Drugs has earned its disruption credentials, and the model deserves serious attention. But the analytical leap from “PBMs are corrupt” to “PBMs are unnecessary” deserves equal scrutiny.
Cost Plus operates primarily in the generics market, drugs with expired or expiring patents that carry negligible rebates precisely because their prices are already compressed. In this segment, the negotiation function that PBMs traditionally performed is largely moot. But this is not where the real cost burden lies. Branded drugs, where pharmaceutical manufacturers capture substantial margins, are exactly where structured negotiation retains its relevance. That space currently remains unaddressed in Cuban's model.
The deeper issue is that the corruption of a function does not eliminate the need for that function. Removing PBMs without a credible answer to the question, who negotiates on behalf of patients and payers, and how do those savings actually reach the patient?, simply resets the clock to an earlier, equally dysfunctional era. Cuban occupies a uniquely insulated position from which to advocate for PBM elimination. That position is not generalizable to the broader system.
Rethinking Vertical Integration
The Gurley-Cuban exchange also raises alarms about vertical integration, the insurer-PBM-ASO nexus, as inherently dangerous. This framing deserves refinement. Vertical integration is not the villain; the consolidation of competing interests under a single controlling entity is. When the same organization is simultaneously responsible for containing costs for covered lives, but profits from spread pricing and rebates, AND controls the communication across all stakeholders, the incentive structure collapses.
Ironically, Cost Plus itself makes the case for how vertical integration can work well. By integrating manufacturing and retail pharmacy, it eliminates the misaligned incentives that plague the traditional supply chain. The model succeeds not by avoiding integration, but by aligning interests across the entire drug trail.
The policy implication is therefore more nuanced than the current discourse suggests. Vertical integration offers real efficiency gains, reduced administrative burden, cohesive data infrastructure, and streamlined technology layers. The goal should not be to dismantle integration categorically, but to regulate the specific conditions under which competing interests converge, with structural requirements ensuring savings flow to the patient.
The Durability Problem
A final consideration concerns market dynamics. Executing disruption at the scale of Cost Plus, disruption that makes entrenched incumbents genuinely uncomfortable, requires one of two things: Either the reputational and financial capital that insulates a Mark Cuban from political and market retaliation or the velocity to capture enough market share that scale becomes its own defense. For any future reformer without Cuban's stature, this is not a peripheral concern. It is the central strategic constraint.
Reforming the PBM landscape will require more than a compelling alternative model. It will require a frank accounting of the structural conditions that made PBMs corruptible in the first place, and the institutional will to build accountability into wherever the negotiation function lands next.
The views expressed in this commentary are the author's own.
This feature is part of a series produced in collaboration with the HBHI Graduate Academy Communications Committee.