In frustration with Washington’s inaction on prescription drug costs for years, U.S. hospitals groups, startups, and non-profits started making their own medicine to counter stubbornly high prices, persistent shortages, and little competition.
Although the efforts are still in various stages, some have shipped millions of medications. Nearly half the U.S. hospitals have received some drug from these projects. As the work accelerates, more medicine should be available in retail pharmacies within one year.
While most groups work on generics, at least one group is working to create brand-name drugs. All groups aim to sell drugs at prices that are lower than competitors.
Stacie Dusetzina, Vanderbilt University’s health policy professor, stated that companies are trying to address different aspects of the problem and coming up with new solutions to make cheaper medicines. “People should have access to the drugs they need without having to go broke.”
Some of these projects solve supply issues and reduce medication costs for hospitals. However, experts in drug pricing are divided on the amount that consumers will benefit.
Dusetzina stated that the effort could lead to needed price competition for at least some drugs.
Aaron Kesselheim, a Harvard Medical School researcher, and price expert at Brigham & Women’s Hospital, Boston thinks that these projects can “lower patients’ out-of pocket costs… absolutely.”
But David Mitchell, founder of the independent consumer group Patients for Affordable Drugs, said the projects are workarounds that help in niches, but are “not enough to fix a broken system.”
Civica Rx was started three years ago by a hospital consortium. It provides more than 50 generic injectable medications in chronic shortage to over 1,400 hospital members and the Veterans Affairs and Defense departments. It has already sold enough medication for 17 million people, which includes many COVID-19 patients.
Martin VanTrieste, chief executive of the company, stated that it is now expanding to directly help patients. CivicaScript, the new partner with Anthem and Blue Cross, has selected six to seven generic drugs as its first. The contract manufacturer Catalent will begin producing the drugs for 50,000 retail pharmacies in 2023.
There are also “alternative drugs makers”:
Two companies, Premier Inc. and Phlow Corp. were focused on providing affordable generics for chronically scarce patients.
— NP2, which is about to start producing cheaper generic IV cancer medicines.
— EQRx, which is creating brand-name drugs for cancer and inflammatory disorders to sell at “radically lower prices” than rival brands.
Walmart recently added insulin as a product to its own brand of diabetes products. In partnership with Novo Nordisk, Walmart is selling its own version NovoLog’s mealtime insulin NovoLog at a fraction of the price.
Mark Cuban, a entrepreneur, has joined the fray, giving his name, money, and even his name to a public benefit company that aims to offer generic drugs at a fraction of the cost of traditional high-cost drugs. There is no need for insurance.
In January, Mark Cuban Cost Plus Drug Co. launched its first medication, a pill for parasitic worm infections that it sells through independent pharmacies for about $40 per two-dose treatment, said founder and CEO Dr. Alex Oshmyansky. It is currently building a factory in Dallas, but it has already paid other manufacturers. The company plans to launch 100 more drugs before the year ends.
Vanderbilt’s Dusetzina believes that Cuban’s company is best placed to reduce out-of-pocket expenses.
She said, “It’s an interesting project to go after products that have little competition — and price goinguging.”
U.S. patent law gives brands-name drugs monopolies that last up to 20 years. Therefore, most alternative drugmakers target off-patent medicines whose price has risen significantly in recent years.
Generics are often cheap. Generic manufacturers have consolidated as generic buyers demanded barely break-even drug prices over the past two decades. Even temporary plant closings were not possible due to the fact that there were fewer factories producing certain generics. The reduced competition resulted in huge price increases, which often forced doctors to look for cheaper, less-effective options. Hospital pharmacists had to work long hours searching for alternatives to drugs in short supply.
Civica was born out of these years-long shortages. It also led a top hospital group purchasing organization, Premier Inc., to launch a program that has contractors making more than 60 products for about 850 member hospitals, said its chief pharmacy officer, Jessica Daley. Both groups claim they have gotten many drugs from national shortage lists.
Phlow Corp., a public benefit drug manufacturer largely funded by government grants, partnered in March with 11 top children’s hospitals to address shortages by making generic medicines in child-size doses for cancer and other life-threatening conditions. In Petersburg, Virginia, Phlow and Civica will be building factories next to each other.
These efforts helped hospitals stock vital drugs such as sedatives and painkillers for COVID-19 patients.
Alternative drugmakers are now hiring U.S. contract producers whenever possible, and buying drug ingredients here or elsewhere in Europe. This is to diversify supply chains heavily dependent on China and India, who severely restricted exports of medicines and other ingredients in the early stages of the pandemic. The Biden administration is also working to increase domestic production for essential generic drugs.
Kesselheim, a Harvard professor, sees new generic manufacturers helping to increase supply and lower prices. However, he believes that developing new brand-name medicines — such as EQRx — is more difficult.
EQRx currently tests 10 new drugs it has licensed for use in cancer and immunologic disorders such as rheumatoidarthritis. One drug that is in final-stage testing could be launched within three years.
The company expects to start work on another 10 patented drugs in ultra-expensive categories in the next year and is collaborating with Exscientia, a firm that uses artificial intelligence to design drugs and speed up testing.
Melanie Nallicheri, the president of EQRx, stated that insurers were among the early investors. She said that they expect the company will turn a profit but also support plans for pricing medicines at as low as two-thirds of rival brand-name drugs.