How Mark Cuban's drug company nabbed its 1st health system partnership

After months of 10 p.m. Saturday emails about utilization trends and "pain points" at Community Health Systems, Mark Cuban Cost Plus Drug Co. secured its first hospital system partnership. Compared to other drugmakers, CHS leaders called the relationship unique. 

In summer 2023, Lynn Simon, MD, chief medical officer and president of healthcare innovation for Franklin, Tenn.-based Community Health Systems, connected with Cost Plus Drugs' CEO and co-founder, Alex Oshmyansky, MD, PhD.

"We've been watching Alex and his team from afar," Dr. Simon told Becker's. "It's always fun to watch disruptors in the industry and see what they're doing and trying to do."

For months, the two companies discussed drug shortage strategies tailored for hospital operations. 

"I think you guys must have spent crazy amounts of hours, like to the point of no work-life balance," Dr. Oshmyansky said in an interview alongside CHS leaders. "I think I got emails from you guys at like 10 o'clock on a Saturday, almost every week, delving into their utilization, figuring out what were the pain points and where we could fit into helping."

On March 7, CHS announced the partnership, which secures shipments of epinephrine and norepinephrine for nine of the system's hospitals. Since then, Dr. Oshmyansky said he has been in talks with dozens of other health systems and hospitals about potential deals. 

Cost Plus Drugs' pharmaceutical manufacturing site in Dallas can produce between 1 million and 2 million doses each year, depending on the vial size. This is relatively small for a drug manufacturing plant, so Cost Plus Drugs isn't seeking to partner with dozens of hospitals yet, but the plant is designed for scalability and quick changes. 

The facility, which cost $11 million and spans 22,000 square feet, could be expanded to eventually fill 70 million doses, Dr. Oshmyansky said. Right now, it is only licensed to ship medicines to four states — Texas, Pennsylvania, Oregon and Louisiana — but it's planning for all 50. 

In November, CHS leaders toured the plant. Heather Weese, PharmD, vice president of pharmacy services, and Kara Scalzo, PharmD, senior director of corporate pharmacy services, said they were impressed by the automation and attention to detail in the 503B facility.

"Cost Plus is probably the first vendor that Heather and I have run across that said, 'We hear what your needs are and we're willing to meet them,' rather than asking us to meet an industry standard," Dr. Scalzo said.

Those standards include vial sizes contrary to normal doses. For example, some epinephrine manufacturers only make 1 milliliter and 30 millimeter solutions, but the typical dose for an IV bag is 5 milliliters — a difference that can lead to medical waste, drug shortages and patient safety concerns. 

Cost Plus Drugs is halfway through manufacturing its first batches, which will be shipped to a lab for sterility tests before appearing at CHS in early April. This summer, the company expects to start manufacturing four chemotherapies in short supply: vinblastine, cisplatin, methotrexate and dacarbazine. As shortages fluctuate, the lines are designed to quickly pivot from one product to another.

Another unique aspect of the partnership is the health system gets answers to "why" questions, such as active pharmaceutical ingredients and manufacturing processes, CHS executives said.

"Usually, we don't have access to the Alexes of the manufacturers," Dr. Weese said, laughing. "I think his willingness to come to the table there really made a difference."

Two medications for nine hospitals is not "life changing," Dr. Simon said, but this isn't simply a vendor purchasing agreement — it's a symbiotic relationship. 

The system is collaborating with Cost Plus Drugs to offer unmet needs in the hospital industry, according to Dr. Simon, who said the partnership is easily transferable. 

"If there's disruption to be had in the industry, let's have at it," she said. "The more the merrier."

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