Sanford Partnering With Other Hospitals to Reduce Drug Prices

SIOUX FALLS, S.D. – What do you do when drug prices are high and quantity is low? After a decade of putting up with this headache, Sanford and others think they have a solution.

“This is part of my job and this is what I tackle everyday in the morning when I come into work,” said Susan Nygaard, inventory coordinator for Sanford Hospital.

It’s making Sioux Falls pharmacists feel blue. Drug prices are out of control, or even worse, sometimes medication isn’t available when a patient needs it.

There are two parts to this problem plaguing the healthcare industry. The first is that oftentimes, a company will charge a lot of money for a drug that hardly cost them any money to produce.

“[This is] profiteering, which happens when a sole-source drug company produces a drug, and they can charge whatever they want because the market will bear that cost,” said Nygaard.

Next, sometimes manufacturers will stop making a drug when it’s not bringing in as much money as they’d like. Suddenly, hospitals scramble.

So, Sanford is eliminating the middle man. Instead of depending on another company to produce drugs or set the prices, they’re going to do it themselves.  Sanford is partnering with 18 other health systems and three charities to form Civica RX, a not-for-profit generic drug company.

“We’re trying to take control of this out-of-control situation that’s been going on for over 10 years,” said Nygaard.

They want to team up with multiple FDA contractors and make these generic meds under the Civica RX brand.

“By cutting out one layer, we are able to purchase these drugs at a much better price,” said Nygaard.

Civica RX is looking at producing 14 different drugs right now, but won’t say which ones just yet.

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