Premier's ProvideGx enlists Fresenius Kabi to tackle drug shortages

Premier subsidiary ProvideGx is working with drugmaker Fresenius Kabi to mitigate drug shortages of injectable thiamine, lidocaine, diphenhydramine, hydromorphone and morphine sulfate, the organizations announced Wednesday.

The subsidiary of the group purchasing and consulting organization aims to bolster the supply of more than 60 drugs in shortage, beginning with sterile injectables. The effort represents a broader push to help solve a problem that has raised healthcare costs and compromised care.

"We have gotten to a tipping point that is driving these new models, ProvideGx being our latest evolution of this journey," said Mike Moloney, Premier's group vice president of integrated pharmacy. "We think it is great that the market is starting to evolve."

Thiamine is used to treat vitamin B1 deficiency while diphenhydramine is used to treat life-threatening allergic reactions. Lidocaine, hydromorphone and morphine sulfate are analgesics used during surgeries, traumas, burns and other invasive procedures. ProvideGx is already working with Baxter International to add to the short supply of the blood pressure medication metoprolol. The aforementioned drugs are currently available to Premier's members and production is ramping up to ensure a sustainable supply, the company said.

Premier is one of a number of stakeholders that are trying to stabilize a fragile pharmaceutical supply chain. Manufacturers are adding additional capacity to develop more generic drugs prone to shortage while providers are working together to come up with a more sustainable solution through Civica Rx.

Premier and Civica secure long-term contracts with their members that commit a certain percentage of their total drug utilization to the enlisted manufacturers. This allows the drug manufacturers to scale up accordingly.

Part of the reason why the sterile injectable market is inefficient is that providers and manufacturers have operated under a transactional relationship, Moloney said.

"Both sides need to come together and work together in a different way to solve this problem," he said. "Creating more competition is a potential solution."

Many generic drugs are produced by one or two manufacturers as companies have consolidated or opted to produce more profitable products. Those manufacturers are vulnerable to production snags, quality issues, natural disasters or other unforeseen events that can throw off the entire supply chain.

As a result, healthcare costs rise and quality falls. Total drug spending per hospital admission increased by 18.5% between 2015 and 2017, according to a recent report from the American Hospital Association, the Federation of American Hospitals and the American Society of Health-System Pharmacists.

Unit prices of some anesthetics, parenteral solutions and chemotherapy surged more than 80% over that span, which in part caused about a quarter of the hospitals surveyed to cut staff.

Premier studied the impacts of the injectable opioid shortage last year, which affected nearly all of the 116 members it surveyed. More than half said the shortage affected patient care, including delaying or canceling surgeries or lowering patient-satisfaction scores.

"This is a huge problem to solve and the more people trying to attack this problem the better," Moloney said.

Premier, which recently announced that it is selling its specialty pharmacy business, represents more than 4,000 U.S. hospitals.

The financial terms of Premier's agreement with Fresenius Kabi were not disclosed. Revenues from the agreement are not expected to materially impact Premier fiscal 2019 earnings.