A hospital-backed nonprofit generic drug manufacturer has radical plans for the drug industry as it prepares to launch operations later this year.
Leaders of the drugmaker said they planned to publish drug prices in an effort to force more transparency in an industry that is known for being opaque.
Utah-based Intermountain Healthcare is leading the nonprofit drug venture that includes two St. Louis area health systems, Ascension and SSM Health, in addition to Michigan-based Trinity Health and the Department of Veterans Affairs.
New details have emerged about the company’s strategy, which was first reported by Politico.
“This facet of the industry is pretty opaque, and we want to be transparent on pricing. We hope that others will follow,” Laura Kaiser, CEO of Creve Coeur-based SSM Health, told the Post-Dispatch.
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The drug venture was first announced in January, but few details were released about the direction of the company.
After the initial reports, the company heard from more than 70 hospital systems, or a third of the market, which expressed interest in joining, Dan Liljenquist, an executive with Intermountain, told the Post-Dispatch. The organization also has talked with Amazon as it works out its strategy. However, executives were quick to note they’ve talked to other industry players, including group purchasing organizations and wholesalers.
The first priority is to stabilize the supply of drugs that have become scarce, including basic medications such as antibiotics or saline, Liljenquist said.
“It’s really important for long-term patient care to have a predictable supply chain,” he said. At many hospitals, he said, chief pharmacy officers spend a majority of their time tracking down medications that should be readily available.
Kaiser said it had affected how her health system scheduled surgeries.
The drug venture is expected to launch later this year, Liljenquist said. He would not disclose which drug would be produced first but said they would first focus on drugs administered in hospital settings.
The organization will, at least at first, sidestep group purchasing organizations and wholesalers, and sell directly to hospitals to ensure they’re able to get the drugs they need.
Liljenquist said they were avoiding a situation in which one entity could purchase the entire supply at once.
The group doesn’t want to produce a situation in which hospitals are “begging a third party to sell drugs to them.”
He likened the scenario to building a power grid and needing to ensure that everybody has access.
The pharmaceutical industry has faced increased scrutiny over rising prices. Recently, much of that criticism has been directed toward middlemen, or pharmacy benefit managers such as St. Louis County-based Express Scripts, which negotiate drug prices on behalf of its clients, employers and health plans.
Express Scripts is not known to be transparent, and many have wondered if it contributes to rising drug prices.
Express Scripts will soon be acquired by health insurance company Cigna, essentially eliminating the nation’s largest standalone pharmacy benefit manager.
“Our intention is to make sure there is a very clear price ... so they can judge the value for themselves,” Liljenquist said.
