Mark Cuban Cost Plus Drug Company will begin manufacturing its own generic medications this week, starting with sterile injectables, founder and CEO Alex Oshmyansky, M.D., Ph.D., said Monday during a White House roundtable on lowering healthcare costs.
The company, which launched just two years ago, will first manufacture commercial batches of epinephrine and norepinephrine for patients in the intensive care unit, Oshmyansky said. "And we, shortly after that, will be making pediatric chemotherapy, limited only by our capacity to make these products," he said.
Cost Plus Drugs built a 22,000-square-foot, $11 million fill-and-finish facility in Dallas. The manufacturing facility will help address drug shortages, Oshmyanksy said.
"Cost Plus Drugs is proudly bringing pharmaceutical manufacturing back to the U.S. with advanced robotic and AI computer vision technology that allows us to pivot from making one drug type to another very rapidly, in principle within four hours, that way whatever product is in shortage we can start making that product," he said.
Oshmyansky, a practicing radiologist, noted that the current pharmaceutical supply chain for generic drugs is an "extremely brittle supply chain."
"Only a few companies make a given drug, and they are prone to either being shut down by the FDA for unsafe practices or having their manufacturing lines physically break. The drive to lower costs also pushes drug manufacturing to China," he said.
According to Oshmyansky, currently, a single vial of Penicillin G benzathine costs $600. "Penicillin-based antibiotics are required to be made in dedicated plants by the FDA, which makes it more difficult to set up alternative manufacturing in times of shortage. We at Cost Plus are aiming to work with the FDA to import Penicillin G benzathine at a price of about $3 a vial," he said.
"Bypassing [pharmacy benefit managers (PBMS)] and source programs allows us to directly sell our products in times of need without being blocked by middlemen. We are pledging to be transparent in our pricing, publishing our true manufacturing cost of operating and adding a flat markup. That way we are profitable and sustainable but never extortionate," he said, adding, "No parent should be told the chemotherapy their child needs is not available. Nobody should not get the lifesaving ICU medications they need or have to postpone their surgery because the common cheap medications are just not available in united in the United States in the year 2024. These shortages are driven by the PBMs and the wholesalers and our dysfunctional model of drug distribution."
Both Oshmyansky and Cuban, who initially joined the company as an investor, attended the White House roundtable on Monday.
The billionaire entrepreneur and "Shark Tank" star told CNBC reporter Morgan Brennan during an interview Monday that the company's biggest challenge was keeping up with volume.
"We have got millions of scrips that we have delivered, probably a couple million patients now. I mean, our numbers, we're setting records almost every single week," he said.
Cost Plus Drugs currently offers about 2,500 generic medications, he noted. "The goal is to get every single drug we're legally allowed to sell. We have probably 10 different brand manufacturers that we're working with, but it's hard to add the brands because those big three PBMs are telling the brands, don't work with CostPlusDrugs.com. So that's our biggest challenge."
Cost Plus Drug Company works directly with drug manufacturers to bypass middlemen and lower prices. For consumers, the price of each drug includes a 15% markup as a profit margin, a $3 pharmacy handling fee and a $5 shipping fee. Cost Plus also transparently displays what it pays for its medicines.
"We're about to open up our manufacturing plant this week, where we will be releasing sterile injectables for generics that are in short supply. We're going to start shipping sterile injectables and pediatric cancer drugs in about two months," he said.
Standing up the production line was a hefty investment, Cuban noted, but has been part of Cost Plus Drugs' vision to address drug shortages. "We don't have unlimited capacity, so once we can get this up and running, then we will look at ways that we can expand it. If we do this right, over the next five years, there will no longer be any more shortages in sterile injectables," he said.
When asked about Cost Plus Drugs' financial operations, Cuban said the company is "not making money yet."
"But that's OK. We're changing an industry, we're saving patients. I can give you example after example. A drug like Imatinib, where you might have to walk into a CVS and they will charge you $2,000 or $2,500, and, depending on the strength, you can get for $21 from Cost Plus Drugs. A drug like Droxidopa, same type of story, $10,000 for three months down to $30 a month from CostPlusDrugs.com. So I may not be making money yet. I will be. This will be self-sustaining, but the impact we're having is just incredible," Cuban said.
Cuban had harsh words for the three dominant PBMs, pointing the finger at their business practices and lack of transparency for driving up drug prices.
"The dominant three PBMs put stock price over health," he told the White House roundtable panel.
The three biggest players in the PBM market are CVS Health's Caremark, Cigna's Evernoth/Express Scripts and UnitedHealth's OptumRx.
"The craziest part is, and the message really that I wanted to get across, these big three pharmacy benefit managers, there's nothing unique about them. There is nothing that they do that so many of the independent and small transaction-based, rebate-free PBMs that couldn't do the same thing," he said during the CNBC interview.
In just two years, Mark Cuban Cost Plus Drugs has become a major disruptor in generic drug pricing and has built up notable partnerships. The company now works with at least four PBMs, including Rightway, EmsanaRx, RxPreferred Benefits and PCA Rx.
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It made waves when it inked a partnership with Coherus BioSciences to sell a biosimilar version of AbbVie’s blockbuster rheumatoid arthritis drug Humira.
Cost Plus also is poised to shake up the drug benefits market. In August, Blue Shield of California, one of the state’s largest health insurers, announced it would drop CVS’ Caremark as its main PBM in favor of a new model for drug benefits. The insurer plans to partner with Cost Plus Drug Company along with Amazon Pharmacy, Abarca and Prime Therapeutics.
It marked the second insurer to sign with Cost Plus, following Harrisburg, Pennsylvania-based Capital Blue last fall.
Bayer also is working with the online pharmacy to provide access to Yaz birth control pills and Climara, a hormone patch for menopause.
Cuban sold his majority stake in the Dallas Mavericks NBA team, and this is reportedly his last season on "Shark Tank." Asked during the CNBC interview what's next for him, Cuban replied, "Healthcare, healthcare, healthcare. It's the only company I've ever put my name on."