Dan Liljenquist, vice president of the enterprise initiative office at Salt Lake City-based Intermountain Healthcare, is fully aware of the high costs and shortages of generic drugs.
He first noticed these problems as a Utah senator working on Medicaid reform. However, he became even more aware of them after joining Intermountain Healthcare in 2012.
He has seen shortages of certain generic drugs Intermountain has relied on for decades and significant, unanticipated price increases for other generic medications.
Given these observations, Mr. Liljenquist and others at Intermountain started thinking about how to address the issues. Intermountain essentially saw two avenues — legislation or entering the generic drug market themselves. The organization chose the latter and has collaborated with St. Louis-based Ascension; Livonia, Mich.-based Trinity Health; and St. Louis-based SSM Health on plans to launch a nonprofit generic drug company. The U.S. Department of Veterans Affairs has also served as a consultant and ally on the initiative, although the department is not contributing financially.
'Project Rx'
The generic drug company does not yet have an official name. However, it is being called "Project Rx" for now. Its overall mission is to ensure generic medications are affordable and available to everyone.
"Some of the drugs we're talking about have been on the market for decades and have been generic for decades," says Mr. Liljenquist. "Then suddenly you have players who have been able to corner the market for certain drugs and increase the price. We are trying to address that portion of the market so when it is clearly in the public domain that we can make sure it's available and affordable."
Competition
Project Rx could be seen as a competitive threat to generic drugmakers, but Mr. Liljenquist says not all generic drugmakers will see the new company as competition. That's because the company plans to only enter certain individual generic drug markets based on the following selection criteria: what medications have experienced shortages, where is the organization seeing substantial generic drug price increases, and what medications are deemed essential to basic hospital care.
"A combination of factors will come into our decision, but again the safety of our patients comes first and the availability of the drugs comes first," Mr. Liljenquist says. "A lot of areas in the generic space don't have these problems. We have no intention of entering [those]. Some do and we intend to enter."
Next steps
The health systems forming the new generic drug company will have their first advisory committee meetings in about three weeks. Once the company is set up, an official launch will occur.
Mr. Liljenquist says he believes the project can easily be capitalized by the involved health systems, as well as any additional partners. He says impact-minded philanthropists have also expressed interest.
"We want everyone who's interested in this to come join us," he says. "This is not a closed shop. This is not a group of hospitals trying to take an equity position in a new venture. We want everybody to partner with us — for-profit hospitals, nonprofit hospitals, community hospitals, academic medical centers. We think collectively this is a problem we can solve together, and we think it's in the interest of everybody to work together on this."
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