Mark Cuban Cost Plus Drug Co. is disrupting the traditional hospital pharmaceutical purchasing model, according to leaders at ScionHealth, which partnered with Cost Plus Drugs nearly a year ago.
In May, Louisville, Ky.-based ScionHealth became the second health system to establish a partnership with Cost Plus Drugs. Becker’s connected with ScionHealth’s Derek Szesny, PharmD, vice president of pharmacy and clinical supply utilization, and Tyler Stewart, PharmD, senior director of pharmacy operations, to discuss the collaboration.
Here are three things to know:
1. Results so far
ScionHealth, which operates more than 90 hospital pharmacies, has realized savings of about $150,000 through its partnership with Cost Plus Drugs.
“It may not sound like much,” Dr. Szesny said, “but that’s actually quite a bit of savings on what is overall a relatively low-cost market basket of pharmaceuticals to begin with. So, the ratio there is actually more significant than the overall percent savings for a large health system like ScionHealth.”
Beyond savings, the primary benefit of the partnership is transparency and drug shortage mitigation strategies offered by Cost Plus Drugs Marketplace, he said.
Cost Plus Drugs sometimes can access medications that traditional wholesalers cannot, including therapies that have faced yearslong shortages, such as carboplatin, lidocaine and lentocilin, according to Dr. Stewart.
The partnership has also helped the system navigate sudden medication shortages. For example, during Hurricane Helene, flooding disrupted production at a Baxter plant in North Carolina that supplied about 60% of the nation’s intravenous fluids.
“Cost Plus Drugs didn’t have enough to make up the whole shortage, but because of that relationship, we were able to get some IV fluids to our central consolidated service center,” Dr. Szesny said, adding that overnight shipments helped the system avoid canceling procedures and other patient care disruptions.
Both Dr. Stewart and Dr. Szesny said the partnership challenges the standard drug procurement model, which usually relies on group purchasing organizations, wholesalers and integrated delivery networks.
“It can be a little uncomfortable pushing the envelope away from the traditional model,” Dr. Szesny said. “The transparency that Cost Plus Drugs brings gives you so much more intelligence and ability to advocate for your health system.”
Health systems are constantly under pressure with lower reimbursements from payers and higher prices from pharmaceutical companies, he said, so “even in an outpatient setting or a retail setting, the smallest bit of margin can be very meaningful.”
2. How ScionHealth leverages the partnership
The health system operates 75 long-term acute care hospitals, 17 rural community hospitals and several clinics, including oncology centers and physician practices. Given its broad care delivery model, the system approaches its partnership with Cost Plus Drugs in three ways:
- Dr. Stewart orders nearly 40 NDCs for the system’s central distribution model, which utilizes Safecor Health unit-dose packaging centers.
- Each community hospital has an individual account for ordering from Cost Plus Drugs.
- ScionHealth’s singular retail pharmacy maintains its own account.
“Honestly, enrolling a new account in Cost Plus Drugs is so simple,” Dr. Szesny said. “I mean it’s done in less than a day. It’s almost like setting up a new shipping address on Amazon. Which is another kind of differentiator I think they brought to the traditional model, whereas it probably takes 30, 45 days minimum to set up a new account with the traditional wholesale distributor.”
3. Future plans
Although the biggest impact so far has been in the acute care space with generic oral medications, Dr. Stewart said he is optimistic about Cost Plus Drugs’ expanding infusion portfolio, which he sees as the next step in the partnership.
Additionally, with shrinking margins in the generic drug industry, partnerships such as this one will be increasingly important for health systems’ long-term sustainability.
“I think the days are gone where you’re going to have different generic manufacturers of drugs. We’ve watched this happen: Several come out and several pull out,” Dr. Stewart said. “You watch drug prices flip, or you watch consolidations in the market where two manufacturers now can’t provide for the entirety of the healthcare system. This is an avenue to continue to maintain continuity of care from procurement of those medications from a drug shortage standpoint.
“If you’re not looking at those opportunities, you’re going to be left behind as things progress.”
