Sick of woes with Big Pharma, hospitals moving to make own generic drugs

intermountain-300x300Some big hospitals and  hospital chains are on the brink of expanding into another aspect of health care. Let’s give them a rare cheer, because they’re taking on Big Pharma and its skyrocketing drug prices and too frequent supply shortages.

Intermountain Healthcare, a nonprofit hospital chain based in Salt Lake City, is leading a well-publicized charge to get its peers nationwide to become part of a new nonprofit group that will make drug generics, products whose patent  protections have lapsed and, thus, are supposed to be cheaper and easier to get because buyers aren’t paying makers for brand names.

Unfortunately for hospitals and patients, Big Pharma sharks have bought up smaller companies that may be the sole makers of these off-patent drugs, which the new investors then jack up in price to reap profits that have outraged the public. Members of Congress expressed their fury in public hearings with Martin Shkreli, the former hedge fund manager and smirking so-called “Pharma Bro,” when he employed this tactic and pumped up the price of a decades-old, infection-fighting drug, Daraprim, to $750 a tablet in 2015, from $13.50.

As the New York Times reported, “Hospitals have also struggled to deal with shortages of hundreds of vital drugs over the past decade, ranging from injectable morphine to sodium bicarbonate (the medical form of baking soda).” The paper also noted that hospitals also, “have long experienced shortages of drugs like morphine or encountered sudden price increases for old, off-patent products like the heart medicine Nitropress.” NBC News says hospitals, in the midst of a bad flu season, are grappling with shortages of simple saline solution, especially because the major maker of intravenous bag-versions has been hard hit by power problems at its Puerto Rican manufacturing operations.

More than 400 hospitals have said they may join Intermountain in its nonprofit, which officials emphasized with limit its foray in the drug business to improving the manufacture and supply of generics only. The hospital groups include Ascension, a Catholic system that is the nation’s largest nonprofit hospital group, and Trinity Health, a large Catholic system that operates in nearly two dozen states. The Department of Veterans Affairs is also “expressing interest,” the New York Times said.

The devil will be in the details as to how this plan gets up, running, and maintained, of course. The proposal alone indicates the huge and largely unanswered howls about Big Pharma’s relentless profiteering. In my practice, I see the huge harms that patients suffer while seeking medical services and their heart-wrenching struggles to access and to afford medical care, especially as prices keep soaring for drugs, some of which prove to be dangerous and even deadly.

How high will drug prices go? Cancer specialists already are frank that they fear treatment costs, especially with new drugs — expenses which can exceed $280,000 for each of the first four years after a patients’ diagnosis — have become “toxic.” Spark Therapeutics recently pushed the medication price boundaries even further, saying it plans to charge patients $850,000 for Luxturna, a drug to treat a rare form of hereditary blindness.

The Trump Administration and Congress have bellowed at and about Big Pharma but have failed to legislate on sky-high drug prices. That may be because the industry, through the powerful Pharmaceutical Research and Manufacturers of America, aka PhRMA, raised more than a quarter-billion- dollars in 2016, tax records show. In that election year, it spent more than $50 million in lobbying on Capitol Hill and in Washington. States, meantime, have stepped in, both making laws and suing drug makers, notably over claims they have colluded on generics’ pricing and supplies. New Jersey also deserves credit for its recent crack-down on Big Pharma’s tactic of buying its way into petty physicians’ prescribing, giving doctors swag, buying them meals and trips, and paying them consulting and speaking fees.

As for the big hospitals and chains and their generic manufacturing plan, it should be noted that not even they consider this a pricing panacea. Although many institutions have their own pharmacies that can compound medications on a limited basis, it may prove resource-intensive for even a large group of hospitals to stand up and run a generic drug business.

Business spin-offs in health care also demand skepticism and scrutiny. Let’s not forget that Big Pharma is grappling with unintended consequences tied to its creation with major employers and insurers of the new business of pharmacy benefit managers or PBMs. Although these operations were supposed to help control drug costs, makers have gotten into nasty infighting with PBMs, blaming them, instead, for huge product price rises.

Hospitals, meantime, have declined to deal with their own financials and have buttressed their bottom lines with mergers, consolidations, and by pushing fiscal tentacles into free-standing surgical centers, urgent care clinics, and other profitable businesses with lower overhead. Bloomberg News service reported recently how the Dallas-based Tenet Hospitals have found it profitable not just to provide care, but, instead, to hound some of the nation’s 43 million patients who owe more than $75 billion in medical debt. Tenet now works with 700 hospitals, serving as their debt collector — which Bloomberg says is one of the few bright revenue-generating spots for a chain burdened with a bad balance sheet and which is unloading member hospitals.

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