Frustrated by rising prices and supply shortages, large hospital systems are banding together to manufacture their own pharmaceuticals. This collective recently announced the intent to form a nonprofit, generic drug company which will be an FDA-cleared manufacturer of the pills hospitals desperately need for their patients.
“We’re seeing an acceleration of both shortages and escalation of prices,” Richard Gilfillan, MD, the chief executive of Trinity Health, tells The New York Times. “There’s not been any effective push back on either of these.”
Trinity Health, the not-for-profit Catholic health system with a presence in 22 states, is one of the hospital groups participating in the upstart project. The leading instigator of the effort is Intermountain Healthcare, the nonprofit healthcare provider based out of Salt Lake City. Other collaborators including Ascension, the largest nonprofit hospital system in the U.S., and SSM Health. The U.S Department of Veterans Affairs is named as a consulting presence within the group.
Most of the details are under wraps, largely to prevent current drug manufacturers from undercutting the effort by slashing prices of targeted medicines. The group acknowledges that the main targets are drugs that have experienced the greatest volatility in recent years, as companies such as Valeant Pharmaceuticals have built a business model based on securing the rights to manufacture established drugs and then aggressively spiking the price.
“This is a shot across the bow of the bad guys,” Marc Harrison, MD, the chief executive of Intermountain Healthcare, tells the Times. “We are not going to lay down. We are going to go ahead and try and fix it.”
The founding partners account for more than 450 hospitals across the country, and additional healthcare systems are expected to join the group. For starters, the organization plans to stick with selling drugs to hospitals, but it could eventually open up to a broader market.
