Hospital leaders are tired of pleading in vain for drugcompanies to stop gouging the prices of critical medication. So anumber of them have finally come up with a plan to go around thepharmaceutical industry entirely bymanufacturing their own drugs.

|

“We are not going to lay down. We are going to go ahead and tryand fix it,” Marc Harrison, the CEO of Intermountain Healthcare, anonprofit Salt Lake City hospital group, told the New York Times.

|

Intermountain is partnering with three Catholic nonprofithospital groups – Ascension, Trinity Health and SSM Health – toform a new non-profit organization that will manufacture anddistribute drugs to hospitals, ideally for much cheaper thanfor-profit pharmaceutical companies.

|

The Times reports that the Department of Veterans Affairs hasindicated an interest in taking part.

|

“Our strong interest here is minimizing the impact of anyshortages of generic drugs,” said Carolyn Clancy, who leads theVeterans Health Administration.

|

The effort has also attracted a number of high-profile advisers,such as former Nebraska Sen. Bob Kerrey and Donald Berwick, theformer chief of the Center for Medicare and Medicaid Services. Theorganization also has recruited former pharmaceuticalexecutives.

|

The pharmaceutical industry has had to fend off increasedscrutiny and criticism in recent years over drug prices as a resultof high-profile cases of massive price increasesfor life-saving drugs.

|

While the most dramatic price increases may have attracted themost media attention, the long-term trend on prices has alsotroubled experts. For instance, spending on prescription drugs hasrisen to 12 percent of overall health spending, up from 7 percentin the 1990’s. Meanwhile, the profit margin for drugs has risen 17percent over the past decade.

|

Pharma executives have often defended the price increases as abusiness necessity and eagerly pointed out that most patients don’tend up paying the full retail price due to discounts negotiatedbetween the drug company with insurers and hospitals.

|

Hospital leaders clearly aren’t buying that explanation. Themove by the four hospital groups to enter the drug-making businesssuggests they are relatively confident that they can make and selldrugs for much cheaper than the pharmaceuticals.

|

Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.

  • Critical BenefitsPRO information including cutting edge post-reform success strategies, access to educational webcasts and videos, resources from industry leaders, and informative Newsletters.
  • Exclusive discounts on ALM, BenefitsPRO magazine and BenefitsPRO.com events
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.