Episode Transcript
Alan Helgeson (announcer):
“Reimagining Rural Health,” a podcast series brought to you by Sanford Health. In this series, we explore the challenges facing health care systems across the country from improving access to equitable care, building a sustainable workforce, and discovering innovative ways to deliver high-quality, low-cost services in rural and underserved populations. Each episode examines how Sanford Health and other health systems are advancing care for the unique communities they serve.
In this episode, Courtney Collen with Sanford Health News talks with Dr. Alex Oshmyansky, founder and CEO of Mark Cuban Cost Plus Drug Company (commonly known as Cost Plus Drugs). Dr. Oshmyansky is a speaker at the 2024 Summit on the Future of Rural Health Care with the topic disrupting health care, prioritizing affordability, trust, and patient-centric solutions.
Courtney Collen (host):
We’re so happy to have you in Sioux Falls. Welcome.
Dr. Alex Oshmyansky (guest):
Thank you for having me.
Courtney Collen:
As the founder and CEO of the Mark Cuban Cost Plus Drug Company, innovation is in your DNA. We know that. Can you tell us what programs or policies you think should be in front and center today and soon to impact affordability, trust, and patient-centric solutions in health care?
Dr. Alex Oshmyansky:
Yeah. You know, with us, it’s all about transparency. It’s probably, certainly not a panacea solution to everything, but it’s certainly a prerequisite before we can get anywhere like before. If you don’t know what the actual cost of the product or services, how can you anticipate being able to negotiate it for it in any way, shape or form?
And I think that goes not just for pharmaceuticals, but health care more broadly. In classic economic theory, if you have an opaque market, the winners are not the buyers. They’re not the sellers. They’re the people that broker information in between. So like when Goldman Sachs sets up a dark pool of equities, the winners are not the people buying or selling equities. The winner is Goldman Sachs.
And you see that happening in health care to an enormous extent. You see struggling health systems in every state. You see generic pharmaceutical companies struggling to keep their lights on, and yet everybody knows health care and pharmaceuticals are unaffordable for everyone.
So really, we’re all about, “Hey, just post the prices for all parties involved in health care.” It’s going to wind up better, not just for the patient, but paradoxically, seemingly paradoxically also for the provider as well.
Courtney Collen:
This past March, you visited the White House, along with your partner Mark Cuban, to speak to a roundtable on the topic of lowering health care costs and bringing transparency to prescription drug intermediaries. Can you tell us, Dr. Oshmyansky, about that experience and what you think is the next crucial step in disrupting health care?
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Dr. Alex Oshmyansky:
Yeah, just on an anecdotal personal level, I’d never been to the White House before. So that was super neat. Never even did like the school tour or anything, so that was just cool to see. But yeah, absolutely.
Again, we’re very focused at that meeting on PBM reform. And since they control effectively the entirety of the pharmaceutical distribution market, or at least the payment processing market, like the way they’re structured is very convoluted. But this is effectively what happens.
You know, by the time for any given drug, they can at least double or triple the cost. So the easiest way, obviously it’s a complex multifactorial problem, but the sort of low-hanging fruit from our perspective is let’s reform the payment processing piece of it, because surely that’s the least value add component of the health care system, and at the same time seems to have the highest margin. So if we can start there, we can move on to more substantive problems further down the road.
Courtney Collen:
Former FDA commissioner Dr. Scott Gottlieb spoke on the topic of navigating health care’s next chapter, innovation, AI and the future of patient-centered care. I’d love to hear your take on AI and how it’s impacting health care. Where do you stand?
Dr. Alex Oshmyansky:
Oh, sure. So part of my background – I’m a M.D./Ph.D. The Ph.D.’s actually in applied mathematics. And I’m actually a visiting faculty member this semester at University of Southern California studying mathematics of artificial intelligence. I’ve gotten too far down the rabbit hole on this one.
But I think the important part, the people that seem most enthusiastic are technologists who don’t really know much about medicine and people in medicine who don’t know much about technology. I think it’s really having both sides in communication about what the really, what are the low-hanging fruits in terms of what the applications can be, what the technology has to be.
Certainly LLMs (large language models) transformer architectures are, no pun intended, transformative for the industry as a whole. But they have a number of issues associated with them. Hallucinations, you know, inaccurate outputs. Like how do you train the models in order to have really substantive, meaningful impact? And I think we’re reaching a point where the models themselves can almost be commodified, you know, Claude versus Sonnet versus Llama versus Gemini. And the real value is actually in the data for training the models.
And I think the health care systems are beginning to understand the value of the data they have. So it’ll be a really interesting time commercially as all these dynamics sort of interplay.
Courtney Collen:
Yeah. And those California students will have a lot to learn from you.
I would love to hear, what innovation or action do you think it’ll take to move the needle most say in the next few years?
Dr. Alex Oshmyansky:
I think it’s – Mark and I are both on the same page that I think it really does have to be a private sector solution to all these problems. So, we went to Washington, we go periodically to Capitol Hill. But really the mechanisms that are driving these pathologies, these arbitrages in the health care system are so convoluted that any attempt at regulation or legislation sort of nips around the edges.
The PBM reform measures that are currently on Capitol Hill generally revolve around spread pricing, rebate policies. And the big PBMs have already come out in their quarterly earnings calls and said if these reforms are implemented, they don’t anticipate a meaningful commercial impact to their business, meaningful financial impact.
So really, I think the long-term sustainable solution for this is for large employers, including health systems, because generally they tend to be the largest employers in their communities, and particularly rural communities. We should move off of them onto the smaller transparent alternatives because there’s nothing those small PBMs can’t do that the big players can.
If anything, you tend to get better customer service with the small guys because they really want your business. So yeah, I think as the industry, as employers realize, hey, we’re getting really ripped off here and move to more transparent solutions, really the private sector I think is going to be the one driving meaningful reform for the PBMs.
Courtney Collen:
Thank you. While in graduate school, you founded a startup dedicated to reducing the rates of specific diseases in hospitals called Altitude Medical. The company is continuously operating now for over 14 years. What impact, Dr. Oshmyansky, have you seen with this innovative idea?
Dr. Alex Oshmyansky:
That was a real learning exercise. I started a company when I was like 20 or 21 years old. And at the time, getting a startup funded was, in my mind something like becoming an NBA player or something. Or a rockstar, you know, it’s a fantasy that doesn’t really happen and turns out no. If you have a good idea, you can, you can raise money for it and get it off the ground. Went out and actually what wound up happening with that, so we sold it.
The intent was to keep doctors and nurses from forgetting to wash their hands, going between patients. Because I’m a putz and I forget to wash my hands, so I don’t want to accidentally hurt anybody. But actually where it wound up having the most impact, most sales was actually in hospitality and food processing. So we sold them to a lot of fast food restaurants, a lot of hotels that didn’t want to – you know, think cruise ships. They didn’t want to cross contaminate. Prevent the norovirus.
At the time, it was a real education as to the unique dynamics that hospitals have in terms of sales into hospitals. Because oftentimes the providers that want a certain product, their incentives are not aligned with the purchasers, and it was a great learning opportunity for further projects to understand really how the supply chain works for health systems.
Courtney Collen:
Incredible work. And I’ll wrap it up with this. Is there a book you’re reading right now or a book that was influential in your career thus far that you’d like to share with us?
Dr. Alex Oshmyansky:
Oh honestly, I’m just, when I get a little downtime, I just try to read fiction or alternatively like books that are relevant for work. I’m reading a big textbook on how payment processing works at the moment. But yeah, I’m reading also “One Hundred Years of Solitude” at the moment. It’s a lovely book.
Courtney Collen:
Well, we thank you so much for your time and for being here in Sioux Falls at the third Rural Health Summit. And of course, as a guest on our “Reimagining Rural Health” podcast. Thank you so much for your time.
Dr. Alex Oshmyansky:
Thank you so much for having me. Thank you.
Alan Helgeson:
You’ve been listening to “Reimagining Rural Health,” a podcast series brought to you by Sanford Health. Hear more episodes in this series or other Sanford Health series on Apple, Spotify, and news.sanfordhealth.org.
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