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Pharma Has Another Reason To Look Out -- Healthcare Systems Now Plan To Make Their Own Drugs

This article is more than 6 years old.

The pharmaceutical industry is looking over its shoulder.

There's Apple, Google, and Amazon looking at the healthcare marketplace, and it's making pharma a bit fearful.  And beyond this industry, new distribution channels may also disrupt the pharmacy benefit management (PBM) business.

Today, Intermountain Healthcare announced a bold initiative to establish a not-for-profit generic drug company aimed at ending shortages and reducing prices. Intermountain Healthcare is leading a collaboration with AscensionSSM Health, and Trinity Health, in consultation with the U.S. Department of Veterans Affairs, to form the company. The five organizations represent more than 450 hospitals around the U.S.  Today's press release made clear price and availability are the key issues.

The new company intends to be an FDA approved manufacturer and will either directly manufacture generic drugs or sub-contract manufacturing to reputable contract manufacturing organizations, providing patients an affordable alternative to products from generic drug companies whose capricious and unfair pricing practices are damaging the generic drug market and hurting consumers.  The company will also seek to stabilize the supply of essential generic medications administered in hospitals, many of which have fallen into chronic shortage.  The new initiative will result in lower costs and more predictable supplies of essential generic medicines, helping ensure that patients and their needs come first in the generic drug marketplace.

The company will be guided by a roster of heavy-hitters that include the pharmaceutical industry, academia and government. The Advisory Committee will include:

  • Madhu Balachandran, retired executive vice president of Global Operations, Amgen
  • Don Berwick, MD; president emeritus and senior fellow, Institute for Healthcare Improvement; former CMS administrator
  • Clayton Christensen, professor at the Harvard Business School and founder of Innosight
  • Bob Kerrey, managing director, Allen & Company; former Nebraska governor, U.S. senator, and pharmacist
  • Martin VanTrieste, retired senior vice president and chief quality officer, Amgen
  • Senior-level leaders from the organizations founding the company

Clearly, times are changing.  Healthcare costs are being discussed at the boardroom and at the kitchen table. And generic drugs certainly can be another point of disruption to help drive costs down.  Yet the value of generic products to pharma's bottom line is still important. And strategies to defend patents—line extensions, pediatric approvals, and extended-release formulations—are still powerful tools that protect revenue and profits. Today, we see all sorts of do-it-yourself creations from hacks to BYOD (bring your own device). It looks like for some large healthcare systems, BYOD might be bring your OWN drug!

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