A doctor had tried to lower the cost of lifesaving rare drugs for years. Here's how 'Shark Tank' investor Mark Cuban jumpstarted his efforts to slash drug prices by 90% or more.

  • Mark Cuban's new drug company has plans to slash drug prices by 90% or more.
  • Its CEO Dr. Alex Oshmyansky has been trying to do so for years, raising $1.3 million at Y Combinator in 2018.
  • It intends to cut high drug costs through transparent pricing and a new Dallas manufacturing facility that will finish packaging drugs for patient distribution.
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Before launching with Y Combinator in 2018, Dallas radiologist Dr. Alex Oshymansky had been trying to lower the cost of generic drugs for years.

Under the name Osh's Affordable Pharmaceuticals, he set out in 2015 to manufacture low-cost rare disease drugs whose prices had shot up by 400 times or more. 

By the end of 2018, Oshmyansky's public benefit corporation had raised a $1.3 million seed round and attracted the interest of "Shark Tank" investor Mark Cuban. By 2019, Cuban went on the record about being (bleeping) mad about healthcare–and Oshymansky had his front man.

Now at the helm of the rebranded Mark Cuban Cost Plus Drug Company, the pair are one step closer to making affordable prescription drugs a universal reality for patients by getting into drug manufacturing. Through a private label arrangement, Oshmyansky contracts with a third party supplier who furnishes him with an unfinished product. Then, by taking final stages of processing and labeling in-house and taking a 15% profit margin, Mark Cuban Cost Plus was able to radically reduce the cost of its first drug, the antiparasitic albendazole. 

In January, the joint partnership donated 10,000 doses of the albendazole to Baylor College of Medicine–saving a public health study looking at the prevalence of hookworm $2 million that Baylor would have needed to spend on the lifesaving medication. 

Dr. Rojelio Mejia, the lead researcher on the study, said the drugs will go toward Houston-area patients identified as positive with hookworm sometime this spring or summer. Mejia has spent the last few years working to eradicate US hookworm, a disease largely caused by poor sanitation conditions and extreme poverty. A study Mejia conducted in rural Alabama found that 34% of those surveyed were infected with hookworm.

Typically, albendazole costs anywhere from $225 on average to $500 a pill, according to the company website and the Dallas Business Journal. The Mark Cuban Cost Plus team has brought that cost to $20 per pill — a 90% price drop at minimum.

 "I didn't expect it to be that way in the richest country in the world," Mejia says. Having traveled significantly and conducted research in resource-poor countries, he was shocked to see the same parasites and living conditions in the American South.

"That albendazole is so expensive for that particular population is problematic to me as a practicing physician," Oshmyansky said. "Hopefully we can replicate that model where we find the drugs, which are overpriced and cause public health problems, because of their price, and begin to address the issues around that."

The company is in the process of creating a Dallas-based fill-finish facility, the final step of pharmaceutical manufacturing before distribution. Continuing in the same vein as albendazole for hookworm, Mark Cuban Cost Plus will focus its initial efforts to provide fair-priced "orphan" drugs for rare diseases.

Mark Cuban's no idle investor, Oshmyansky says

Oshmyansky started Osh's Affordable Pharmaceuticals after getting angry while reading about Martin Shkreli 's antics in 2015, when the "pharma bro" jacked up the cost of orphan drug Daraprim by 5,000%. Having had patients suffer as a result of unaffordable prescription drugs and being a lifelong diabetic, Oshmyansky channeled his outrage into a nonprofit pharmaceutical company. 

It was a few months after raising $1.3 million at Y Combinator that Osh's Affordable Pharmaceuticals attracted the interest of the "Shark Tank" investor. An undisclosed amount from Cuban and his business expertise has "completely transformed everything we're doing," Oshmyansky says.

Although transparency in development and distribution has always been key to Oshmyansky's mission, Mark Cuban Cost Plus's plan to add a 15% margin for financial viability was Cuban's idea.

"There are no hidden costs, no middlemen, no rebates only available to insurance companies," the company website says, describing their model as "radically transparent."

Contrary to his public persona as a sports and technology-driven media personality, Cuban is "deeply and profoundly knowledgeable" about Big Pharma's pricing issues.

"Mark's involvement has allowed us to bypass those early steps and greatly accelerate where we want it to be," Oshmyansky added, bringing Mark Cuban Cost Plus closer to becoming a competitive and profitable pharmaceutical company.

Selling medications directly to patients at cheaper rates

Mark Cuban Cost Plus's ultimate goal is to brng down the price of drugs with transparent pricing and manufacturing, starting with albendazole, the drug donated to Baylor.

By starting with a single drug launch, the company intends to work through the inevitable issues that arise with expanding production. Currently, Mark Cuban Cost Plus has suppliers for up to 120 different drugs, but will proceed with caution in terms of expanding its drug offerings.

Initially, Oshmyansky planned to start with a compounding pharmacy model, making custom formulations of generic drugs at a cost orders of magnitude cheaper than current market rates. 

Now, with Cuban's brand name recognition and input, Mark Cuban Cost Plus has moved to private label arrangement to make a 90% drug price cut a reality for albendazole. By putting its label on an FDA-approved drug from an independent supplier and selling it at a drastically reduced price, the company is now able to disrupt a market with few competitors.

Unlike other companies in the space like Civica Rx that have targeted their cost-cutting drug offerings at hospitals, Oshmyansky said Mark Cuban Cost Plus intends to start with outpatient rare disease drugs distributed directly to patients.

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