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Our Take: Premier, 15 health systems address PPE shortage by acquiring stake in Prestige Ameritech

Jun 01, 2020

Premier Inc., a group purchasing organization and health care improvement company based in Charlotte, N.C., and 15 health systems that are all members of Premier have acquired a minority stake in Prestige Ameritech, the country’s largest producer of surgical masks. Prestige Ameritech also makes N95 respirators, face shields, medical goggles, medical gowns, and other products.

The move is one of the latest steps that health systems throughout the U.S. have taken to address shortages of critical items by strengthening domestic manufacturing capabilities and changing the way they source products and supplies.

Premier noted in a press statement that approximately 80% of personal protective equipment (PPE) used by U.S. health systems comes from China and Southeast Asia. The pandemic cast a spotlight on this reliance on overseas manufacturers, as widespread shortages led governors in several states to bid against one another in their attempts to attain the PPE needed to protect health care workers and other frontline responders.

North Richland Hills, Texas-based Prestige Ameritech makes all of its products in the U.S. and sells them all to U.S. customers, Premier said.

Under the agreement, the 15 health systems committed to purchasing a portion of their annual supply of face masks from Prestige Ameritech for up to six years. Advocate Aurora Health, Ballad Health, Banner Health, CommonSpirit Health, Henry Ford Health System, Universal Health Services, and University Hospitals are among the health systems participating in the arrangement. Financial terms were not disclosed.

The agreement is part of a program Premier announced in mid-May “to invest in domestic and geographically diverse manufacturers to ensure a robust and resilient supply chain for essential medical products.”

Our Take: While we’re in favor of fostering good trade relations with other countries, it’s imperative that our nation’s hospitals, health systems, and other providers have ready access to the equipment they need. In light of the piecemeal approach to securing PPE that has unfolded over the last few months, we take our hat off to Premier and these 15 health systems for taking the initiative. In all probability, countless lives would have been preserved if an adequate supply of PPE had been available at the start of the COVID-19 outbreak. Through arrangements like this one, just maybe a similar situation can be prevented in the future.

Of course, health systems have been collaborating on innovative solutions way before now. Civica Rx is a prime example. In response to “ubiquitous” shortages of critical generic drugs, Intermountain Health and six other health organizations, along with three philanthropies, created Civica Rx in 2018 to ensure the timely availability of affordable essential generic drugs.

Within a year, the first patients were being treated with a Civica Rx medication, and the corporation has now launched 20 injectable essential drugs for use in hospitals throughout the U.S. Civica said it’s on track to deliver another 20 or so drugs this year and is working toward 100 drugs by 2023.

Earlier this year, Civica Rx partnered with 18 Blue Cross Blue Shield companies to create a Civica subsidiary to bring lower-cost generic drugs to consumers.

And just a couple of weeks ago, Civica announced that it was part of the partnership recently funded by BARDA to address drug shortages resulting from the pandemic. The partnership is tasked with providing immediate, U.S.-based “end-to-end” manufacturing of critical drugs to treat patients hospitalized with COVID-19. Richmond, Va.-based Phlow Corp. is leading the partnership; Civica’s role is to manufacture the finished dosage forms of the drugs for the national stockpile.

Excelera is another example. Leaders from six health systems came together in 2011 to form a national network of specialty pharmacies. Their goal was to improve patient outcomes through integrated, coordinated care at the point of care. The network’s membership now includes two dozen health systems and academic medical centers.

Last year, Excelera launched the industry’s first pharmacy benefit manager owned by health systems, as well as a solution for health systems that want to establish a home infusion pharmacy.

The pandemic is obviously taking a huge toll on health systems and other providers across the U.S., but we’ve seen repeatedly how they can come up with innovative responses to a variety of issues. We have faith that they will continue to collaborate and find creative solutions to the challenges that lie ahead.

What else you need to know

Two more large health system mergers have been called off. Beaumont Health, based in Southfield Mich., and Summa Health, based in Akron, Ohio, issued a joint news release on Friday stating they are ending their “partnership plans.” No specific reason was provided, although the two health systems announced in April that they were postponing the $6.1 billion merger because of the pandemic.

Earlier in the week, four hospitals on Chicago’s South Side said they couldn’t see “a path forward” for their planned $1.1 billion merger. Advocate Trinity Hospital, Mercy Hospital & Medical Center, South Shore Hospital, and St. Bernard Hospital signed a letter of intent in January to become a single health care system. Their plans also included building a new hospital and several community health centers. But on Tuesday, the Chicago Tribune reported that the hospitals said the merger had been scrapped because state lawmakers decided against providing $520 million in funding they had requested over the next five years to complete the project.

AstraZeneca will receive up to $1.2 billion from the Department of Health and Human Services (HHS)’s Biomedical Advanced Research and Development Authority (BARDA) to support development, production, and delivery of the SARS-CoV-2 vaccine candidate the British drugmaker is collaborating on with the University of Oxford. In return, the U.S. is to receive at least 300 million of the first 1 billion doses produced. According to an HHS press statement, the first doses could be available in October. In April, a Phase I/II clinical trial of the investigational vaccine was initiated in 1,000 healthy volunteers in England, AstraZeneca said in a separate announcement. If the results of that trial are positive, the company said it plans to begin a Phase III trial with 30,000 participants, as well as a pediatric trial.

Merck revealed its involvement last Tuesday in the development of two potential vaccines against SARS-CoV-2, as well as its collaboration on a drug candidate to treat COVID-19. Merck said in a news release that it signed a definitive agreement to acquire Themis, a privately held Austrian bioscience firm, for an undisclosed cash payment. Themis is part of a consortium that has been developing a vaccine candidate based on a measles vaccine. Merck is also collaborating with the International AIDS Vaccine Initiative (IAVI) to develop a vaccine using the same recombinant vesicular stomatitis virus technology used to develop Merck’s Ebola vaccine. BARDA will provide initial funding for that effort, according to Merck. The company also entered into an agreement with Miami-based Ridgeback Biotherapeutics for the exclusive worldwide rights to develop and market an oral antiviral drug invented at a not-for-profit biotech company owned by Emory University. Financial terms of that agreement were also undisclosed.

Sanofi intends to sell most of its stake in Regeneron Pharmaceuticals, a biotech firm based in N.Y. The French drugmaker holds approximately 23.2 million shares of Regeneron’s common stock, representing roughly 20.6% ownership. Sanofi will reduce its holdings by approximately 22.8 million shares, or about $13 billion worth, mostly through a proposed public offering; Regeneron agreed to repurchase $5 billion of its stock when the public offering has been completed. The boards of both companies have approved the transaction. Sanofi noted in a press statement that the two companies have been collaborating since 2003 and that the proposed transaction will not affect their collaboration.

A new insulin model will cap insulin costs at $35 per month for beneficiaries of participating Medicare Advantage and Part D plans, starting with the 2021 plan year. CMS announced last Tuesday that 88 plan sponsors, representing more than 1,750 stand-alone plans, have applied to participate in the model, which is part of the Part D Senior Savings Model that CMS announced in March. It includes pen and vial delivery methods for rapid-, short-, intermediate-, and long-acting insulin. CMS said the $35 copay will extend through the Part D coverage gap.

President Donald Trump said on Friday that the U.S. will stop funding the World Health Organization (WHO) and end its relationship with the global agency, Reuters and other news outlets reported. In mid-May, he said the agency had 30 days to make “substantive improvements” before U.S funding would be cut. He said the WHO has failed in its response to the pandemic because it has ceded “total control” to China, and he alleged that health officials in China have engaged in a cover-up and have pressured the WHO to “mislead the world.”

UnitedHealth Group’s Optum has acquired naviHealth, a company based in Brentwood, Tenn., that provides post-acute care management services for an estimated 4.5 million Medicare Advantage members as part of value-based care programs, such as CMS’ Bundled Payments for Care Improvement Advanced program. Although terms of the acquisition were not disclosed, PE Hub reported that sources said the deal values naviHealth at about $2.5 billion, including debt.

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