Dive Brief:
- A collaboration led by health system Intermountain Healthcare Inc. is creating a non-profit generic drug company focused on "ending shortages and reducing prices."
- The aim of the company is to produce generics directly or through subcontract manufacturing to ultimately offer patients cheaper drugs and a more stable supply of essential medications.
- Also participating in the collaboration are Ascension Health, SSM Health and Trinity Health Corp., while the U.S. Department of Veterans Affairs will provide consultation. The consortium of healthcare providers currently represents 450 hospitals across the U.S., and is open to further health systems joining.
Dive Insight:
While branded products have garnered much of the attention surrounding sky-high drug costs, generics makers have enacted their fair share of price increases too. Most egregious — as exemplified Martin Shkreli and Turing Pharmaceuticals LLC (now Vyera Pharmaceuticals LLC) — are instances of price gouging, where generics manufacturers take an off-patent drug and jack up its price by huge amounts.
Such tactics have contributed to rising healthcare costs and caused problems with maintaining adequate supplies. In Turing's case, Shkreli oversaw the price of Daraprim (pyrimethamine), an HIV medication, go from $13.50 per tablet to $750.
Turing is hardly the only controversial player. Valeant Pharmaceuticals International Inc. picked up Isuprel (isoprenaline) and Nitropress (nitroprusside) and quickly increased their prices by six-fold and three-fold, respectively.
Mylan lifting up EpiPen (epinephrine injection) prices by over 400%, and Questcor Pharmaceuticals Inc. (now under Mallinckrodt plc) inflating the Acthar Gel (repository corticotropin injection) price from $40 per vial in 2001 to $34,000 in 2014 are just a few more examples.
The issue isn't solely in the U.S. either. In November, Concordia International Corp. faced a fine for increasing the price of the hypothyroidism drug liothyronine by nearly 6,000% over 10 years.
Also carrying some of the blame for steep price increases are the branded drug companies shedding products that have reached the end of their lifecycle, the increasing consolidation of generics manufacturers, and a concentration of pricing power in the hands of a few companies.
The health systems collaboration, as yet unnamed, could be a route to growing supply and using competition to push down price, especially if profit is less of a driver.
"It’s an ambitious plan, but healthcare systems are in the best position to fix the problems in the generic drug market. We are confident we can improve the situation for our patients by bringing much needed competition to the generic drug market," said Marc Harrison, CEO of Intermountain Healthcare.
Legislators are also targeting the generics pricing problem.
Despite a challenge from the Association for Accessible Medicines (AAM), a generic drugmakers' trade body, Maryland is implementing House Bill 631, which will allow state attorneys general to take action against excessive price increases by generic drug manufacturers, with the goal of curbing price-gouging. On the other side of the country, California has enacted State Bill 17, which requires 60 days notice for price hikes of more than 16% in any two-year period.on pharmaceuticals, including generic drugs.