The developing relationship between hospitals and Big Pharma

Partnership can spur creativity and ultimately benefit consumers.

The pharmaceutical industry has been the target of widespread public criticism in recent years, with most of the narrative centered on seemingly unjust pricing. But if providers and pharmaceutical companies make an effort to cultivate stronger partnerships, consumers can reap the benefits.

Hospitals and pharmaceutical manufacturers have traditionally looked at themselves as transactional partners, but that relationship is changing dramatically. As independent hospitals become parts of larger health systems, they have improved their leverage as partners and have transcended the role of simple purchaser. The traditional purchasing relationship between big pharma and physicians — the pharmaceutical sales rep model — has become outdated since upwards of 40 percent of US physicians are employed by hospitals or large integrated health systems, which now have policies prohibiting such sales practices.

Collaborating with pharmaceutical companies

From an ethics and a compliance standpoint, we all recognize the reasons why we needed to better manage the way pharma reps market to providers, but for the benefit of our patients, we still need to be collaborating with Big Pharma. At Northwell, we've created an entity called Pharma Ventures that focuses attention and resources on enterprise partnerships with pharmaceutical companies. It’s led by Elaine Brennan, one of our healthcare executive with a background in the pharmaceutical industry, who has helped formalize our agenda around clinical trials, research and value-based agreements.

Recognizing that pharmaceutical companies are key stakeholders in the health care ecosystem, I meet regularly with pharmaceutical company executives to discuss mutually beneficial strategies. After all, prescribing drugs as part of treatment modalities is an integral part of physicians' responsibilities, and the companies that create these drugs should be given a seat at the table to forge partnerships that can lower costs and increase efficiency.

Pharma Ventures has been exploring risk-based contracts with pharmaceutical partners, which are designed to link drug prices to drug performance with actual patients. Large health systems like Northwell can also serve as a super-site for clinical trials, where clinical researchers can recruit from multiple locations in fully integrated systems and reduce patient enrollment and site set-up costs, thanks to our systemwide electronic health record.

Northwell and pharmaceutical companies have also collaborated on a number of digital and consumer-driven initiatives we believe can leverage the combined strengths of our organizations to improve the customer experience and lower costs. These initiatives include a physician education pilot program that will help better inform physicians about clinical trials and new treatment options.

Driving innovative solutions

I commend the efforts of some providers to enter the pharmaceutical manufacturing arena themselves, though these goals require capabilities that hospitals and health systems don't have on hand. Though I wish only the best for health systems that look to begin manufacturing generic drugs, the investment required to scale up these capabilities has led Northwell to decide that its resources are better spent on partnerships with established organizations such as Boehringer Ingelheim, AstraZeneca, Johnson & Johnson and Merck.

Many people have called for increased regulation on the pharmaceutical industry. One instance where regulation may be beneficial is broadening the reach of clinical trials so they reach a more-diverse patient population. Northwell has one of the most-diverse patient populations in the US, making it a highly attractive destination for clinical research trials.

Highly publicized instances of bad actors within the pharmaceutical industry, such as Martin Shkreli and his unfathomable greed, have soured public opinion on the sector, but it would be a misstep to paint the industry in broad strokes based on the actions of a few. Almost every member of the public takes some kind of prescription drug and medication, and if providers approach the manufacturers of those drugs with a collaborative mindset, innovative solutions can create significant benefits for both parties and, most importantly, the consumer.

This op-ed appeared in Becker's Hospital Review.