Healthcare has been characterized as one the toughest industries to disrupt. Reasons for this are plentiful and include the overwhelming complexity of the healthcare industry and the sometimes uncoordinated interdependence between numerous players.
Another barrier to disruption is the market’s reliance on the provision of essential drugs or medical supplies — which, sometimes, is reliant on a single source. Drug shortages have plagued the industry for years. Today, hospitals are experiencing a lack of IV saline fluid due to the severity of flu this year and the devastating impacts of Hurricane Maria in Puerto Rico. But this is far from a new phenomenon.
Now, a groundbreaking initiative to impact the shortage of generic drugs is underway. In collaboration with Ascension, SSM Health and Trinity Health, and in consultation with the U.S. Department of Veterans Affairs, Intermountain Healthcare is working to establish a not-for-profit generic drug company aimed at ending shortages and reducing prices. The five organizations involved represent more than 450 hospitals around the U.S.
The Advisory Committee will include some former executives representing the pharmaceutical company Amgen, as well as CMS and government. One notable player is Clayton Christensen, professor at the Harvard Business School and the leading voice on disruption in the healthcare space. His recent paper on the subject, titled “How Disruptive Innovation Can Finally Revolutionize Healthcare,” discusses key points for providers, payers, legislators and all innovators looking to disrupt, including the need to understand how urgency is changing competition and driving all stakeholders to develop new strategies, business models and capabilities.
How pharmaceutical companies respond — especially companies whose primary business is generic drugs — will be a hot topic to monitor as the initiative takes off. They may be forced to lower prices to compete, or they could decide to lessen or redirect their focus away from generics. Competition in this arena has been largely hampered. Now, it’s being given a chance to flourish.
The important takeaway from an initiative like this is not whether it succeeds or fails (and it’s slated to succeed, given the players involved), but that it is happening at all. It wasn’t too long ago that an effort like this would have been unthinkable. Today, in the age of constant disruption, anything feels possible — even fixing our broken healthcare system.
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