As Intermountain Healthcare looks to upend the status quo by launching its own generic drug manufacturing firm, the health system is hoping the deal forces more transparency in the industry.
Healthcare Dive chatted with Dan Liljenquist, the man leading the charge behind Civica Rx, about the status of the nonprofit drug venture as it looks to get off the ground soon in an effort to curb drug prices, particularly for drugs that have been on the market for years.
Fed up with skyrocketing prices for generic drugs, Utah-based Intermountain and other nonprofit providers announced earlier this year they would launch their own drug manufacturing company. Recently, the group named former Amgen executive Martin VanTriste as its CEO and said it had selected the 14 hospital-administered drugs it plans to manufacture, although officials have declined to name the therapies.
Here are some takeaways from the conversation.
Civica Rx will not dictate what hospitals can charge patients.
Liljenquist says Civica will make drug prices readily available to consumers. Patients will be able to see what it costs Civica to make each drug and the price hospitals pay to have it stocked on their shelves.
With prices out in the open, it may give pause to hospitals thinking about charging an exorbitant amount to administer that specific drug, Liljenquist said. "That patient will be able to see the differential, and we're hoping that transparency will have people thinking twice about doing so," he said about raising prices for a particular drug.
Over the years, various outlets have reported on hospitals marking up innocuous items such as a Band-Aid after caring for patients. Civica Rx won't dictate to hospitals what they can charge. It's hoping the transparency takes care of that.
But as patients become increasingly frustrated over growing healthcare costs, will pulling back the curtain on pricing in one realm of hospitals' operations force them to become fully transparent elsewhere?
"We certainly hope so," Liljenquist said. "This market really should act more like a public utility." The first focus should be adequacy and supply and then providing that supply at fair prices, Liljenquist said.
For all the optimism surrounding the venture, it's still a heavy lift to navigate a highly regulated process that needs approval from the Food and Drug Administration.
Unlike Civica's mission, some drugmakers have claimed that they have a moral authority to set prices high to answer to their shareholders. Liljenquist fundamentally disagrees.
"When you think that your business is to benefit a subset of members at the direct expense of society at large, that's a problem. Frankly, it's one of the reasons why we think Civica is so important. We're trying to create a societal asset," he said.
"Where these abuses occur, this is where Civica can help step in and police the market."
What drugs will be tackled first, and what about insulin?
Although the group has been tight lipped about the hospital-administered drugs they plan to manufacture, some wonder whether the venture will take on insulin. The rising price of the blood glucose regulator has become so steep that some with the disease are bartering for or rationing the lifesaving hormone.
Type 1 diabetes and the need for insulin hit close to home for Liljenquist.
He told Healthcare Dive he has three brothers who all have Type 1 diabetes, and his father is an endocrinologist. "I know the stress of what the prices of insulin has done," he said. "What we have now is not sustainable."
But Liljenquist said producing insulin is not his decision to make. He did add: "Everything is on the table ... I can say that our interest broadly is to alleviate the suffering of patients for essential medications," he said.
Guidelines for hospitals wanting to buy from Civica Rx so far:
The rules for the new venture are straightforward, even though few details on what it actually plans to produce are public.
Every hospital, regardless of size, will have the same access to products.
There will be one single market price. A larger system will not enjoy discounts on larger volume purchases.
Every hospital will have the same contracting terms.
The main aim of the drug venture will be to alleviate shortages at hospitals while curbing rising prices for generic drugs. That doesn't mean Civica will take on every generic drug. The focus is narrow in scope.
Staying true to its original mission is the reason Civica chose three philanthropic organizations to serve as governing members of the venture alongside the hospitals already on board. Those organizations include the Laura and John Arnold Foundation, the Peterson Center on Healthcare and the Gary and Mary West Foundation.
"Where these abuses occur this is where Civica can help step in and police the market. It's a private sector solution to a complex problem," Liljenquist said.