Dive Brief:
- Hospital operator Community Health Systems has inked an agreement to purchase hard-to-find medications from Cost Plus Drug Company.
- CHS is the first national health system to buy drugs from Cost Plus Drugs, according to a Thursday release.
- To start, CHS hospitals in Texas and Pennsylvania will purchase drugs like epinephrine and norepinephrine, which treat a number of conditions and are used heavily in emergency rooms and intensive care units. Currently, the U.S. is facing a shortage of epinephrine due to an increase in demand, according to the Food and Drug Administration.
Dive Insight:
CHS is one of the largest for-profit hospital chains in the U.S., with more than 70 acute care hospitals and a large network of outpatient care sites across 15 states.
As such, it’s a major client win for Cost Plus, which billionaire entrepreneur Mark Cuban launched in 2022 in a bid to lower the cost of prescription drugs in the U.S.
Cost Plus contracts directly with pharmaceutical companies for their drugs, cutting out middlemen like PBMs, 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.
Cost Plus is one of a growing slate of avowed pharmacy disruptors and has had some success in poaching employers and health plan clients from legacy pharmacy benefit managers. Since the fall, Pennsylvania-based plan Capital Blue Cross, Intermountain-operated payer Select Health and Blue Shield of California, one of the largest insurers in the state, have inked deals with Cost Plus.
Now, Cost Plus is starting on its hospital roster as well.
Along with procuring difficult-to-find medications at a transparent mark-up, Cost Plus will provide CHS hospitals with flexible ordering around things like vial size to reduce waste and remove potential for dosage errors, according to the release.
“Our relationship with Mark Cuban Cost Plus Drug Company has the potential to generate significant advantages for our affiliated hospitals,” Lynn Simon, CHS chief medical officer, said in a statement.
The two companies aim to scale the partnership, according to the release, but did not provide additional details.
Hospitals are looking for new ways to cut costs amid elevated operating expenses, including pharmaceutical spend. On a call with investors last month, CHS CEO Tim Hingtgen called controlling expenses an “overarching priority” for the system.
