Mark Cuban Cost Plus Drug Co. will serve as a wholesale drug distributor for all 71 hospitals affiliated with Community Health Systems, the organizations announced June 27.
Cost Plus Drugs launched the wholesale services in early 2024, but for the first time, the company is rolling out the offering to a large health system.
The pharmaceutical company has direct relationships with 38 of the 40 largest generic manufacturers and multiple secondary distributors, according to Cost Plus Drugs' CEO and co-founder, Alex Oshmyansky, MD, PhD.
To kickstart the deal, the Franklin, Tenn.-based system will buy 12 generic therapies through Cost Plus Drugs Marketplace — the name of the wholesale business — for its 71 hospitals spanning 15 states. Cost Plus Drugs will charge a 15% markup.
The model is similar to Cost Plus Drugs' direct-to-consumer service, which sells drugs at their manufacturing fee with a 15% markup, $5 pharmacy labor fee and $5 shipping fee.
"[In] conversation we've had with multiple health systems, as we've been talking about our manufacturing capacity, folks have noted that the price that they're paying for medications from their wholesaler is greater than that on just our direct-to-consumer mail-order platform," Dr. Oshmyansky told Becker's, adding that the service supports the company's mission to make healthcare more affordable.
As a wholesaler, Cost Plus Drugs pays manufacturers more than bigger "players," according to Dr. Oshmyansky. The drugmakers can then avoid bidding wars and races to the bottom, and those extra earnings could materialize in more safeguards for potential drug shortages.
"We just facilitate the transaction," he said. "We don't think we should be getting as much; we shouldn't be doubling the cost of it. And I think that'll help build a more resilient supply chain as well because the manufacturers, who are very slim on their margins, now have more margin to work with to build resiliency in their supply chains."
In March, CHS became the first health system to partner with the pharmaceutical company, which entailed ordering personalized vial sizes of epinephrine and norepinephrine from Cost Plus Drugs' manufacturing plant in Dallas. (In May, Louisville, Ky.-based ScionHealth, a 94-hospital system, was the second system to ink a partnership.)
The new CHS collaboration will lean on the Marketplace, a standalone business of Cost Plus Drugs, by initially supplying CHS with 12 generics for infections, nausea, glaucoma, acid reflux and hyponatremia. For future purchases, the system's pharmacy team will alert Cost Plus Drugs about medications that are expensive or in shortage supply.
"The most exciting aspect of the partnership is that the Mark Cuban Cost Plus team really listens to us and allows us to have a voice about what we're struggling with," Heather Weese, PharmD, vice president of pharmacy services at CHS, told Becker's.
CHS' agreement with Cost Plus Drugs Marketplace could save the system "several hundred thousand dollars," according to a June 27 news release.
"People talk a lot about disruption but rarely do you actually see it," Lynn Simon, MD, chief medical officer and president of healthcare innovation at CHS, told Becker's. "And I think that what Alex and Mark Cuban and that team is doing is truly something that can be very disruptive in healthcare in a positive way. And if we can help contribute to that, I think that's exciting for us as well."