Mark Cuban’s Cost Plus Drug Co. partners with first hospital system

Cost Plus Drug Co., founded by billionaire entrepreneur Mark Cuban in an attempt to lower prescription drug costs, has reached an agreement with its first national health system partner.

Community Health Systems (CHS), based in Franklin, Tenn., initially will purchase certain hard-to-source pharmaceuticals, such as epinephrine and norepinephrine, for its affiliate hospitals in Texas and Pennsylvania. CHS is one of the nation’s largest for-profit hospital chains, with more than 70 acute care hospitals and a large network of outpatient care sites across 15 states.

“There are many opportunities for innovation in the health-care industry, including rethinking and even disrupting the way providers purchase products and services,” said Dr. Lynn Simon, president of health-care innovation and chief medical officer for CHS. “Our relationship with Mark Cuban Cost Plus Drug Co. 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 Drugs contracts directly with pharmaceutical companies, cutting out pharmacy benefit managers, and recently started manufacturing its own generic medications as well. The company currently offers 2,500 generic drugs and a handful of brand-name drugs at cost, with a 15% markup and set handling and shipping fees.

Both partners described the deal as a long-term collaboration “to address critically important issues related to drug supply in the hospital setting.” Along with 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 Community Hospital Systems avoid these by allowing the hospitals “more flexible ordering opportunities” including alternative vial sizes not offered by other drug manufacturers, it said.

The partnership announcement comes shortly after Cost Plus Drugs began manufacturing generic sterile injectables at a new 22,000-square-foot, $11 million facility in Dallas. This 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 at the White House, last week, Cuban said the company is “not making money yet” but promised the business will eventually become self-sustaining.

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“We are excited to start shipping our first sterile injectables from our Cost Plus Factory,” he said. “Our mission is to end drug shortages, and this is just the first step. Our partnership with CHS will give them access to epinephrine and norepinephrine at a transparent cost-plus price. 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.”