Fed up with drug companies, hospitals decide to start their own

For years, hospital executives have expressed frustration when essential drugs like heart medicines have become scarce, or when prices have skyrocketed because investors manipulated the market.

today, some of the country’s largest hospital systems are taking an aggressive step to combat the problem: They plan to go into the drug business themselves, in a move in which appears to be the first on This specific scale.

“This specific can be a shot across the bow of the bad guys,” said Dr. Marc Harrison, the chief executive of Intermountain Healthcare, the nonprofit Salt Lake City hospital group in which can be spearheading the effort. “We are not going to lay down. We are going to go ahead in addition to try in addition to fix the idea.”

While Intermountain executives could not name the drugs they intend to make, hospitals have long experienced shortages of drugs like morphine or encountered sudden cost increases for old, off-patent products like the heart medicine Nitropress. Hospitals have also come under criticism for overcharging for their services, including for some drugs.

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Several major hospital systems, including Ascension, a Catholic system in which can be the nation’s largest nonprofit hospital group, plan to form a brand-new nonprofit company, in which will provide many generic drugs to the hospitals. The Department of Veterans Affairs can be also expressing interest in participating.

In all, about 300 hospitals are today included inside group. different hospitals are likely to join.

Dr. Harrison said they planned to focus only on certain drugs. “There are individual places where there are problems,” he said. “We are not indicting an entire industry.”

Dr. Kevin A. Schulman, a professor of medicine at the Duke University School of Medicine who has studied the generic drug market in addition to can be advising the effort, said: “If they all agree to buy enough to sustain This specific effort, you will have a huge threat to people in which are trying to manipulate the generic drug market. They will want to think twice.”

The idea can be to directly challenge the host of industry players who have capitalized on certain markets, buying up monopolies of old, off-patent drugs in addition to then sharply raising prices, stoking public outrage in addition to prompting a series of Congressional hearings in addition to federal investigations. The most notorious example can be of Martin Shkreli, the former hedge fund manager who raised the cost of a decades-old drug, Daraprim, to $750 a tablet in 2015, via $13.50.

Hospitals have also struggled to deal with shortages of hundreds of vital drugs over the past decade, ranging via injectable morphine to sodium bicarbonate (the medical form of baking soda), shortfalls in which are exacerbated when only one or two manufacturers make the product.

“We’re seeing an acceleration of both shortages in addition to escalation of prices,” said Dr. Richard Gilfillan, the chief executive of Trinity Health, a large Catholic system in which operates in nearly two dozen states in addition to can be part of the group. “There’s not been any effective push back on either of these.”

Intermountain executives could not discuss many details of the project, citing fears in which competitors could shut them out of the market by quickly dropping the cost of the drugs in question, then raising them again later. They said they could focus on drugs whose prices have risen sharply or in which have been in short supply.

“We’re going to have to hold in which very close to our vest,” Dr. Harrison said. The company will either rely on third-party manufacturers or decide to make the drugs themselves.

The brand-new company will initially focus on selling to hospitals, although officials said they may eventually expand to offer the products more broadly.

Dr. Carolyn Clancy, the executive in charge of the Veterans Health Administration, said its pharmacy experts have consulted with the different systems about the project in addition to can be today working out the details of its possible involvement. “Our strong interest here can be minimizing the impact of any shortages of generic drugs,” she said. While she said the agency can be able to negotiate Great prices for veterans, “we don’t necessarily control supply” in addition to have experienced many of the same shortages, including the recent lack of saline fluids, as the different health groups.

“We are constantly scanning the horizon in addition to constantly attentive to interruptions of supply chains of medicines,” she said.

In addition to Daraprim, several old, off-patent drugs have seen sharp cost increases over the past several years. In 2015, Valeant Pharmaceuticals International became a Wall Street darling after the idea sold investors on its business type of buying up old drugs, then raising the prices precipitously. in which year, the idea sharply raised the prices of two heart drugs, Nitropress in addition to Isuprel, adding millions to hospitals’ drug bills almost overnight. Valeant’s practices led to a series of investigations in addition to Congressional hearings as well as a shake-up of the company’s leadership.

Representatives for the generic drug industry have noted in which many of the most high-profile cases have involved old, off-patent drugs for which there has been no generic competition.

The trade group for generic manufacturers, the Association for Accessible Medicines, said its members generally welcome competition. “The whole generic industry can be premised on competition, in addition to in which competition brings dramatic savings for patients,” said Allen Goldberg, a spokesman for the group.

although generic drug makers have also come under scrutiny.

The hike inside cost of doxycycline hyclate, an antibiotic, which increased to $3.65 a pill in 2013 via 5.6 cents in 2012, led to a congressional investigation as well as state in addition to federal cost-fixing inquiries into some of the industry’s biggest players. Last fall, a coalition of state attorneys general broadened a lawsuit over cost fixing, accusing 18 companies of engaging in illegal practices involving 15 drugs.

Anthony R. Tersigni, the chief executive of Ascension, said he in addition to different hospital executives felt they had little choice although to try to solve the problem themselves. “We took the position collectively rather than waiting in addition to hoping for the generic drug companies to address the idea,” he said. “We have to address the idea head on.”

Intermountain executives said in which they could seek approval to manufacture the products via the Food in addition to Drug Administration, which has vowed to give priority to companies in which want to make generics in markets for which there can be little competition.

The project boasts a high-profile list of advisers, ranging via Bob Kerrey, the former Democratic senator of Nebraska, to Dr. Donald Berwick, a former administrator for the Centers of Medicare in addition to Medicaid Services, as well as two former executives with Amgen, the drug maker.

Erin Fox, a drug shortage expert at the University of Utah, said the idea of creating a nonprofit drug company can be promising. “I think anything in which increases the number of suppliers will help,” she said. She added in which the trick will be in selecting the right third-party maker to ensure Great quality.

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