Health system-led drug company garners strong provider support

Providers are optimistic that a health system-led generic-drug company can lower drug costs and mitigate shortages, and the vast majority say they will buy drugs from the venture, according to a new survey.

Intermountain Healthcare, Ascension, SSM Health and Trinity Health are working with the U.S. Veterans Affairs Department to fight back against drug companies that unexpectedly hike the prices of decades-old off-patent generic drugs.

The providers also want to create a more reliable supply of generic drugs like sodium bicarbonate and saline that are vulnerable to shortages.

Although the health systems didn't specify what drugs their new venture will make, they want to provide both sterile injectables and oral medications either through their own facility or by contracting with existing manufacturers.

Eighty percent of nearly 750 providers, payers and pharmaceutical companies polled said they are optimistic or cautiously hopeful that the new endeavor will change the status quo, according to a Reaction Data survey. Ninety percent of 605 hospitals and clinics surveyed said they would buy drugs from the new entity.

Drug spending is expected to increase by 8% in 2018, driven by ballooning brand-name drug prices, according to the Government Accountability Office.

“This effort could teach others how to make a market for themselves and put pressure on the rest of the industry,” Dr. James Augustine, an emergency physician who works at Mercy Health hospitals in Cincinnati, told Modern Healthcare in a recent interview. “Ideally, this re-energizes the industry to be more responsible in pricing behavior.”

Not surprisingly, most of the 91 pharmaceutical companies that participated in the survey dismissed the effort, indicating that they weren’t threatened because of the complexity of the pharmaceutical supply chain and the regulatory hurdles.

Only 29% of pharmaceutical companies expected the venture to be successful, whereas 38% of payers said the endeavor will succeed.