Mark Cuban Cost Plus Drug Company has found its first national health system buyer for hospital drugs currently in short supply.
Franklin, Tennessee-based for-profit Community Health Systems has signed onto a partnership with the billionaire-backed manufacturer to purchase pharmaceuticals like epinephrine and norepinephrine for its affiliate hospitals in Texas and Pennsylvania. The products are often used in emergency departments and intensive care units, with epinephrine currently listed on the Food and Drug Administration’s list of ongoing drug shortages.
Though the collaboration is beginning with just two states, the companies said they “expect to scale the partnership in numerous and meaningful ways.”
“Our partnership with CHS will give them access to epinephrine and norepinephrine at a transparent cost plus price,” Cuban said in a release. “This is the start of what we know will be an amazing partnership that will reduce drug shortages and drug costs and enhance the care CHS hospitals provide for their patients."
CHS spans 71 hospital affiliates with about 12,000 beds across 15 states and recently reported $12.5 billion in 2023 net operating revenues. It, like other hospitals and health systems across the country, has disclosed rising pharmaceutical spending in recent years.
The companies’ announcement framed the deal as a long-term collaboration “to address critically important issues related to drug supply in the hospital setting.”
Beyond high costs or shortages, these issues can include large amounts of pharmaceutical waste and potential dosage errors when medications need to be measured at the bedside. Cost Plus Drugs can help CHS avoid these by allowing the hospitals “more flexible ordering opportunities” including alternative vial sizes that aren’t offered by other drug manufacturers, the organizations said.
“There are many opportunities for innovation in the healthcare industry, including rethinking, and even disrupting, the way providers purchase products and services,” Lynn Simon, M.D., president of healthcare innovation and chief medical officer at CHS, said in the announcement. “Our relationship with Mark Cuban Cost Plus Drug Company has the potential to generate significant advantages for our affiliated hospitals and for other forward-looking hospital organizations that also want to reduce costs, reduce waste, avoid drug shortages and improve patient care.”
Cost Plus Drug Company currently offers about 2,500 generic medications and 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.
The company has proven itself a disrupter on both generic drug pricing and the drug benefits market, where it currently works with at least four pharmacy benefit managers and supplanted major names like CVS Health’s Caremark with its inaugural payer deals.
Of note, the CHS partnership announcement comes just days after Cost Plus Drug Company kicked off manufacturing of generic sterile injectables at a new 22,000-square-foot, $11 million facility it built in Dallas. That plant is outfitted with aseptic robotic manufacturing lines and is slated to initially produce commercial batches of epinephrine and norepinephrine with pediatric chemotherapy products next in line.
During a roundtable discussion held this week at the White House, Cuban admitted that Cost Plus Drug Company is “not making money yet” but promised the business will eventually become self-sustainable.