Hospitals Are Banding Together To Fight Back Against The Martin Shkrelis Of The World

In the wake of dramatic price increases for life-saving drugs, four not-for-profit hospitals are banding together to create their own generic drug company.

Intermountain Healthcare, Ascension, SSM Health, and Trinity Health—which together own about 10% of U.S. hospitals across the nation—are tired of seeing their patients suffer because the medications they depend on are becoming outrageously overpriced.

That’s why the four major hospitals are coming together to fight the generic drug makers head-on, by launching a company of their own.

“This is a shot across the bow of the bad guys,” Dr. Marc Harrison, the chief executive of Intermountain Healthcare, the nonprofit Salt Lake City hospital group that is leading the movement, explained to the New York Times. “We are not going to lay down. We are going to go ahead and try and fix it.”

The groundbreaking decision came after hospitals spent years watching patients suffer, as they waited for drugs that were either scare in supply or far too expensive to buy.

"It’s hard to make people better if they don’t have access to the medicines they need," Harrison said in the interview. "To add insult to injury, those medicines are being priced in a way that’s nonsensical."

Since the hospitals made their announcement, even the Department of Veterans Affairs has expressed interest in joining the effort to make life-saving medications more affordable for patients all over the country.

Dr. Kevin A. Schulman, a professor of medicine at the Duke University School of Medicine who has studied the generic drug market, said this move will help combat oligopolies in the generic drug market.

“If they all agree to buy enough to sustain this effort, you will have a huge threat to people that are trying to manipulate the generic drug market. They will want to think twice,” he said.

The announcement comes nearly three years after infamous hedge fund manager Martin Shkreli raised the price of Daraprim, a decades-old drug, from $13.50 to $750 in 2015.

Over the last decade, hospitals have also been experiencing an extreme shortage of vital drugs, like injectable morphine to sodium bicarbonate, while prices have exponentially increased.

“We’re seeing an acceleration of both shortages and escalation of prices,” said Dr. Richard Gilfillan, the chief executive of Trinity Health, a large Catholic system that operates in several states across the U.S. “There’s not been any effective push back on either of these.”

Although Intermountain officials are not divulging specific details regarding their plan right away, they say they will be focusing their efforts on drugs that are either in very short supply or that are extremely expensive.

“Our strong interest here is minimizing the impact of any shortages of generic drugs,” said Dr. Carolyn Clancy, the executive in charge of the Veterans Health Administration.

With the dramatic price increase in drugs that have plagued patients over the last few years, Anthony R. Tersigni, the chief executive of Ascension, said he and other major hospital executives feel as if there’s just no time to waste on fighting this issue.

“We took the position collectively rather than waiting and hoping for the generic drug companies to address it,” he said. “We have to address it head on.”