Community Health Systems said Thursday it has signed on to be the first health system purchasing lower-cost drugs manufactured by the Mark Cuban Cost Plus Drug Co.
Nine CHS hospitals across Texas and Pennsylvania will initially purchase thousands of vials per quarter of epinephrine and norepinephrine, increasing the quantity over the next year, said Dr. Alex Oshmyansky, CEO of Cost Plus Drugs, which also contracts directly with pharmaceutical manufacturers to offer drugs at fixed-rate markups. Each vial will cost less than $20, he said.
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Additional financial details of the agreement were not disclosed.
Cost Plus will manufacture the epinephrine, used to treat severe allergic reactions, and norepinephrine, which increases blood pressure, at a 22,000-square-foot drug manufacturing facility in Dallas that began production this week. Oshmyansky, who announced the plant's upcoming opening at a White House roundtable on healthcare costs March 4, said Cost Plus plans to scale the facility's manufacturing capacity to include more limited-supply drugs and produce 1 million to 2 million doses each year.
He said Cost Plus is licensed to manufacture drugs in four states and hopes to secure licensing in the remaining 46 states within the next year.
"We've been setting up our factory for the better part of four or five years," Oshmyansky said. "What we always assumed that we needed was a reliable partner that was all in on this concept of affordable pharmaceuticals and guiding us as to what will the stakeholders in this ecosystem find the most value in."
If all goes well, CHS -- a for-profit health system based in Franklin, Tennessee -- is open to purchasing more types of drugs from Cost Plus and/or expanding the current agreement to more states, said Dr. Lynn Simon, president of healthcare innovation and chief medical officer. The system is also looking at purchase options through Cost Plus' wholesale marketplace, she added.
Simon said the goal is to make an impact beyond CHS' 70-hospital footprint.
"When we look at innovation, it's not all about technology or [artificial intelligence]. it's just, how do we do things differently?" Simon said. "We [operate] community hospitals. We have some that are on the smaller side, some that are larger, but they reflect the whole landscape of hospitals across the country, so I think the opportunities that we see and the ones that we share with [Cost Plus] are ones we think should scale not only to our system, but through the rest of the industry."
Under the agreement, CHS estimates 15% to 50% savings on epinephrine and norepinephrine.
Oshmyansky said manufacturing drugs for other health systems is a possibility. Cost Plus already works with systems in other areas of the business. For example, the company partnered with Intermountain Health-owned Select Health in September to provide health plan members access to more than 1,000 prescription drugs.
