Hospitals to Form Nonprofit Drug Company

Some of the largest hospital systems in the U.S. are taking a bold step to address drug price hikes due to market manipulation. They plan to go into the drug business themselves – an unprecedented move. Marc Harrison, MD, chief executive of Intermountain Healthcare, which is spearheading the effort, told The New York Times, “This is a shot across the bow of the bad guys. We are not going to lay down. We are going to go ahead and try and fix it.”

The goal is to challenge the industry players who buy up monopolies of off-patent drugs and then sharply raise prices. When Valeant Pharmaceuticals International increased the prices of two heart drugs, adding millions to hospitals’ drug bills overnight, a series of investigations and Congressional hearings followed.

About 300 hospital systems, including Ascension (the largest non-profit health system in the U.S.), are now included in the group that plans to form a new nonprofit company that will manufacture a number of generic drugs. Details of the project remain secret for fear that competitors could quickly drop the price of the drugs in question, then raise them again later.

Anthony R. Tersigni, the chief executive of Ascension, told The New York Times that he and other hospital executives felt they had little choice but to try to solve the problem themselves. “We took the position collectively rather than waiting and hoping for the generic drug companies to address it,” he said. “We have to address it head on.”

Source: The New York Times, January 18, 2018.