The following post is a response to the following articles published by the New York Times.
URL Link: Fed Up With Drug Companies, Hospitals Decide to Start Their Own
To summarize the article, a group of hospitals (~ 300), led by Intermountain Healthcare, a nonprofit hospital group based in Salt Lake City, is attempting to start their own drug manufacturing company. The main goal of this company is to supply these hospitals with medications at a reasonable price. However, the important take-away from this article is not just this new model for medication supply management, but the reasons for why these hospitals have decided to invest in drug manufacturing. While one of their main reasons was to avoid any drug shortages in the future, the main reason is hinted at by the title of the article itself; disgusted by some of the business practices of some drug manufacturers, these nonprofit hospital organizations has decided to ban together and strike back at investors who needlessly raise prices on important medication in order to profit off of patients and hospitals.
One notorious example involves the generic drug, Daraprim. The modus operandi of these investors is to secretly acquire all of the manufacturers of an off-patent drug in an attempt to monopolize the supply of that drug. Once a monopoly has been established, they will then raise the price of that drug significantly. In this way, Daraprim’s price went from $13.50 a pill to $750 almost overnight. This move, from the healthcare community, is a statement that they will not stand by while profiteers seek to benefit from the poor and desperate.
On an alternate note, another reason that this hospital-focused manufacturing organization is being established is to prevent or minimize the effects of drug shortages on patient care. Even now, hospitals nationwide in the U.S. are still feeling the effect of drug shortages caused by natural disasters which occurred a few months back. For more information on this, please refer to a side article noted below.
URL link: U.S. Hospitals Wrestle With Shortages of Drug Supplies Made in Puerto Rico
The drug shortages are caused not only because medicines are being diverted to Puerto Rico as part of a relief effort, but also because many major drug manufacturing companies, like Baxter and Mylan, have bases located Puerto Rico whose operations were interrupted by the storm, Hurricane Maria. Supplies of commonly used drugs, like Tylenol, and more critical drugs, like HIV-treating drug Prezista, have been reduced and becoming scarce due to the storm. And while supplies of drugs are in shortages, other medical supplies are being affected too. For example, shipments of mesh and surgical scalpel that comes from the island has been reduced.
This move by Intermountain Healthcare to supply their own medication is a brilliant one. If other managed care organizations can follow their example, it will solve both the immediate problems like drug shortages and monopolies and also long-term problem of rising healthcare costs. This plan, named Project Rx, will allow healthcare organizations to more easily control the cost of medication production and cut out any unnecessary middlemen.