The FDA is now actively exploring all of these issues. Mr. Gottlieb has announced his intention to hold a public meeting in July 2018 to solicit suggestions on how to decrease the barriers to creating new generic medications.8
One novel solution is coming from hospitals. A coalition of approximately 300 hospitals, led by Intermountain Healthcare in Salt Lake City, is now getting into the business of manufacturing generic drugs.9 Publicly, the coalition will not say which drugs it is targeting, although it has implied that it plans to focus on the drugs with tenuous supply chains.
These hospitals are now in the process of forming a nonprofit company; this solution is intriguing enough that the Department of Veterans Affairs has expressed an interest in participating. As A. Marc Harrison, MD, president and chief executive officer (CEO) of Intermountain Healthcare, said, “This is a shot across the bow of the bad guys.” He may be onto something: Following this announcement, more than 100 hospitals contacted Intermountain to find out where they could sign up.10
Ultimately, the coalition hopes to serve as a moderating force on the market by increasing supply to keep up with demand, so the prices of medications don’t follow the same market forces that dictate the cost of an Uber at the end of the night. The Intermountain CEO describes his vision as creating a nonprofit public utility that will earn just enough money to sustain its operation, but not enough to turn a profit.
Even if a cheaper alternative exists, your patient may never find out about it. By now, we are all well aware of the role that pharmacy benefit managers (PBMs) play in the cost of prescription drugs. In brief, a PBM serves as the middle man between a drug manufacturer and an insurance company. This seems like a perfectly benign function until you realize the PBM has no motivation to pass along any savings to the patient. It gets worse: In most states, pharmacists are prohibited from telling patients when it would be cheaper to pay cash instead of purchasing a drug through their insurance plan.11
The ACR’s Government Affairs Committee has taken on this issue, and its efforts are already bearing fruit.12 Pharmacist gag laws are now illegal in several states, with more to follow. Moreover, 30 states have passed laws governing drug pricing. Maryland has focused on generic drugs in particular; the Maryland attorney general can take action against any generic manufacturer that increases the cost of its drug by greater than 50% over one year, raising the possibility of clawing back some of the profits to return to the consumer.13
Supply, Demand & Conspiracy
I am not a conspiracist. I don’t believe a dark state is controlling the government. I don’t think a second shot came from the grassy knoll, and I’m pretty sure that wasn’t Elvis who was spotted in the Nashville Publix parking lot. That said, I find it difficult to look at the price of generic drugs and not wonder whether the conspiracists may be onto something.
