Friday, January 19, 2018

Hospitals are going to try to start generic drug companies?

From the New York Times, some interesting news:
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. 
Now, 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 that appears to be the first on this scale. 
“This is 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 that is spearheading the effort. “We are not going to lay down. We are going to go ahead and try and fix it.” 
....Several major hospital systems, including Ascension, a Catholic system that is the nation’s largest nonprofit hospital group, plan to form a new nonprofit company, that will provide a number of generic drugs to the hospitals. The Department of Veterans Affairs is also expressing interest in participating....
Does anyone else think this is an absurd plan? It doesn't sound like they really want to be in the generic API business, so they will probably be buying generic APIs and making solid dosage formulations on their own. Will this save them any money? How will this company actually respond well to a shortage? If Whateverprim has a shortage of suppliers, won't the API go up in price? (I guess that the idea is that the spike in price will not be manipulated by speculators?)

As someone who works in chemical manufacturing, I found this final quote in the article to be quite amusing:
She added that the trick will be in selecting the right third-party manufacturer to ensure good quality.
Isn't it always? (Why will the third-party manufacturer decide that they want to cut these folks a break? (I guess the answer is 'guaranteed volume.' (Isn't it always?))

Readers, am I wrong here? Am I missing something? I must be. 

5 comments:

  1. Maybe I'm dumb or maybe it's a lazy Friday brain day, but it sounds like they aren't going to manufacture anything... So I fail to understand how this will change anything.

    But I'll await responses as I take my first sips of coffee now.

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  2. So if they manufacture their own drugs, does that mean the savings get passed on to the patient?

    Gee, maybe only $9.99 a pill instead of 10 bucks for an aspirin.

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  3. Whether they outsource manufacturing or not I have interacted with only a few MD who could come close to management of GMP operations (and more who screw up basic GCP) and are willing to listen to those with such expertise. Of course if these Hospitals do control the cost of the drugs will they then deal with all their "handling fees" that drastically pad the charges (i.e. a 2 cent Aspirin given to a patient is billed at $35)

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  4. The API thing might work out for drugs like Daraprim where the issue is 100% caused by someone being greedy, otherwise I have no idea. One thing I'm pretty sure of though, is that the patients will never see the money "saved".

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  5. As to your question, I do indeed think this is an absurd plan. Any drug they want to prescribe/use in the US has to be FDA-approved as a generic so if they don't want to purchase any of the existing generics they would have to rely on (or establish...) an alternative supplier which would of course first have to pass all regulatory hurdles from filing to approval (drug and manufacturing site). In other countries, healthcare systems use their purchasing power to get generics at an often substantial rebate but that's probably too much of a socialist approach ;-)

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looks like Blogger doesn't work with anonymous comments from Chrome browsers at the moment - works in Microsoft Edge, or from Chrome with a Blogger account - sorry! CJ 3/21/20