Hospitals Launch Their Own Competition to Generics Drugs – Implications for Devices

In the last month, the healthcare trade press focused on an ongoing spat between the drug industry and America’s hospitals over who is to blame for rising costs. As part of this, and of particular interest to AMDR is that a number of hospitals launched their own not-for-profit generic drug company to compete, ironically with the generic drug companies!  HealthLeaders reports that “frustration and concern over rising costs and sketchy supplies of critical in-patient drugs has promoted seven major health systems to form their own drug company.” Richard J. Gilfillan, MD, CEO of Livonia, Michigan-based Trinity Health says, “the generic drug marketplace is broken and, in response, we have created a unique and innovative fix – a public utility that is governed, exclusively, for the good of the people it serves.”
AMDR does not know a lot about the drug industry but we do know there are similarities between reprocessed medical devices and the generic drug industry.  Reprocessed and remanufactured devices are just as safe and effective as an original equipment manufacturer (OEM) device.  Both reprocessed devices and generic drugs meet the same quality standards as brand.  Both meet FDA’s regulatory requirements. Both are a fraction of the cost of buying new. Both provide competitive marketplace pressure to the brand or OEM products.
And, like the situation described above with the generic drug marketplace, there is also hospital frustration with the marketplace for both drugs and medical devices. To be clear, there is a robust, competitive marketplace for hospitals to purchase reprocessed and remanufactured devices, but that does NOT mean all reprocessors are the same. Similar to the situation explained in the article with generic drugs, not all medical device makers, or even medical device reprocessors, are the same.
As a resource, AMDR has made available an alert of “anti-reprocessing tactics” that some devices companies employ aimed at undermining hospitals’ ability to reprocess, or maximize the value of their own medical device assets, and instead attempt to maximize sales and volume for the device company.  Some companies even undertake efforts that purport to promote reprocessing, but may in fact be more interested in forcing hospitals to buy more disposable medical devices.  AMDR urges hospitals to carefully consider whether their medical device vendor is forcing obsolescence into their devices with built in chips or kill switches, installing software “upgrades” that may hamper the hospitals ability to use reprocessed product provided by other vendors, vendors refusing to support cases where reprocessed product is used – from competing vendors, or offering “blended” pricing schemes without providing accountability on the mix of new to reprocessed product.
The frustration hospitals are experiencing with the drug industry is similar to what they’re frustrated about with medical device companies. AMDR cannot evaluate or give purchasing advice to hospitals, but we can make healthcare providers aware of the credo and code of conduct to which AMDR members-companies must adhere.  AMDR members believe that reprocessing plays a critical role in helping hospitals achieve cost-savings and improvements to patient care.  AMDR and its members are aligned with the fundamental interests of hospitals and healthcare providers and we hope to work together to maximize the value of existing device assets to increase quality, reduce costs and improve patient care.