PHILADELPHIA (TNS) — Penn Medicine is the first nonprofit health system to sign a contract to purchase generic drugs from Mark Cuban’s Cost Plus Marketplace. The move announced last week is designed to help Penn rebuild its profit margins, but will not change what consumers pay at Penn’s retail pharmacies.
The contract covers the top 100 generic medications that Penn sells to patients who use its pharmacies, which fill 1.5 million prescriptions annually at 16 locations. Patients will have the same co-pay they have under their drug plan. The drugs from Cost Plus Marketplace are not for hospital patients.
Penn declined to provide any information on the financial benefit it expects from the elimination of what it called “unnecessary markups.”
“As health systems face rising costs on many different fronts, we’re constantly looking for creative ways to be more cost-effective and simplify care delivery to meet the needs of our patients and care teams,” said Kevin B. Mahoney, chief executive officer of the University of Pennsylvania Health System.
Cuban started his Cost Plus business to bring more price transparency to the pharmaceutical market by charging a flat 15% markup on its cost. Cuban is a Dallas billionaire know for his Shark Tank reality TV series and other businesses. He sold his majority stake in the Dallas Mavericks NBA franchise this year.
Community Health Systems Inc., a for-profit based in Franklin, Tenn., was the first health system to start using Cuban’s Cost Plus Marketplace. That relationship started with CHS hospitals in Texas and Pennsylvania buying a small number of drugs, but has been expanded to include a dozen drugs used in CHS hospitals.
That expansion was expected to result immediately “in hundreds of thousands of dollars in savings and enabling the potential for even greater savings over time,” CEO Tim Hintgen told investors in July.
CHS has 69 hospitals in 15 states, including three in the Scranton-Wilkes-Barre area of Pennsylvania. The company had $12.5 billion in revenue last year.
Penn’s health system had $10.9 billion in revenue in the year ended June 30. It has six hospitals and an extensive network of specialized outpatient centers.
