Hospital Partnership and Penicillin Imports: The Latest on Mark Cuban Cost Plus Drug Company

Mark Cuban Cost Plus Drug Company continues to disrupt the pharmaceutical market by partnering with health systems to supply hospitals with cheap medicine. It recently announced it would also import insulin.

The pharmaceutical company announced a partnership with for-profit Nashville-based Community Health Systems, a 71-hospital system spanning 15 states. The company will supply 12 drugs, which include antibiotics and chemotherapy nausea treatment, to the entire system. Fierce Healthcare reports that the 12 drugs alone are expected to save the system several hundred thousand dollars from the start.

The partnership is the first of its kind for Cost Plus, and CEO Dr. Alex Oshmyansky says the two organizations have been in talks for about a year before the launch. He says the plan is to meet every couple of weeks with CHS leadership to develop a larger drug portfolio for the system. Oshmyasnky, a trained radiologist and polymath, has long been working to disrupt what he calls a broken pharmaceutical system and fight against unnecessarily high drug prices. A cold email led to a partnership with Cuban and he now leads the only company founded by the former Mavericks owner that bears Cuban’s name.

Cost Plus sells drugs to the hospital through its transparent 15 percent markup pricing program, resulting in significant savings on hundreds of medicines produced by other generic drug companies. Cost Plus also sells medicines filled and finished in the Deep Ellum facility. The first shipment of Cost Plus-manufactured medicine was shipped to CHS hospitals in March, but Oshmyansky says the factory is scaling up to total capacity by the end of the year. The company begins with norepinephrine and epinephrine, which help with allergic reactions, stress regulation, and cognitive function during stressful situations. Epinephrine is on the Food and Drug Administration’s list of current drug shortages.

The fill-and-finish facility utilizes technology and robotic machinery that allows it to finish the manufacturing process for any number of medicines despite having a relatively small footprint. Part of the mission of Cost Plus’ facility is to target orphan medications with lower patient populations. There are often shortages of these medications because it isn’t worth the investment for drug manufacturers to produce them. Cost Plus is targeting pediatric oncology medications and should be able to manufacture them soon.

“The benefits of this partnership are significant and include immediate savings on drugs frequently used in the hospital setting,” said Dr. Lynn Simon, CHS president of healthcare innovation and chief medical officer. “Equally important, our collaboration is about strategically pursuing opportunities to address various pharmaceutical-related issues affecting all U.S. hospitals. We have an opportunity to do things differently, and the Mark Cuban Cost Plus Drugs team is making very positive change possible.”

In addition to the CHS partnership, Oshmyansky says Cost Plus has seen a significant uptick in bulk purchasing from pharmacies looking to stock their medicine for lower prices. Bulk purchases are growing faster than Cost Plus’ direct-to-consumer business, at around 30-40 percent month over month. Buying directly from Cost Plus cuts out pharmacy benefit managers and middlemen between pharmacies and manufacturers, often driving up prices.

Despite the growth, Oshmyansky says existing contracts limit smaller pharmacy companies from buying cheaper medicine from Cost Plus. Existing PBMs have contracts that require clients to buy most drugs through their contract or risk losing discounts on medications. Between lower Medicare reimbursements and PBM pressure, independent pharmacies are struggling. A National Community Pharmacists Association survey found that one in three independent pharmacies may close in the next year.

“A lot of healthcare organizations want a better, more innovative, and more cost-effective approach to drug purchasing,” Oshmyansky said. “Our partnership with CHS is proving that’s possible. We see unlimited potential to help U.S. hospitals, physicians, insurers, and most importantly, the patients who need access to affordable medications.”

In addition to selling medicine to hospitals and pharmacies and manufacturing drugs in shortage, Cost Plus is also working with the FDA to import penicillin due to a shortage of antibiotics. The company said it is also slashing the price from $500 to less than $15 per unit. Reuters reported that Cost Plus will import 1.2 million units of the drug from a Portuguese manufacturer, which will be available for providers ranging from small clinics to hospitals to purchase. “Thank you to @US_FDA for working diligently with our leadership team on this drug shortage item, further strengthening our commitment to making essential treatments accessible and affordable,” Cost Plus wrote on Twitter.