• Sidebar: A Closer Look at Direct Contracting

    Karen Wagner Jul 28, 2016

    During drug shortages, some providers may be interested in contracting directly with manufacturers, a strategy typically employed for specialty pharmacy products. However, Michael J. Alkire, COO, Premier, Inc., Charlotte, N.C., believes such an approach is of limited value in the long run.

    “It would require many health systems to come together to create the level of scale to actually influence the manufacturing line, let alone capability,” Alkire says. “One of the benefits of a GPO is that we can forecast a manufacturer’s demand, and in this day and age that is incredibly valuable. Because of our data capabilities, we can work closely with a manufacturer to help them forecast what really needs to be manufactured. That ends up stabilizing their pricing and forecasting structure. When health systems do one-offs with manufacturers, they often fall back on us because we have stronger relationships with the manufacturers we have on contract.”

    Erin R. Fox, PharmD, director, Drug Information Service, University of Utah Health Care, Salt Lake City, notes that some healthcare organizations may not have a choice. “For many shortages, the manufacturers require direct orders in order to access the product. We do this all the time in order to have continued access. It doesn’t necessarily mean we have a direct contract—we might still have a GPO contract.”


    Laura Ramos Hegwer is a freelance writer and editor based in Lake Bluff, Ill.

    Interviewed for this article: Michael J. Alkire, COO, Premier, Inc., Charlotte, N.C.

    Erin R. Fox, PharmD, director, Drug Information Service, University of Utah Health Care, Salt Lake City.

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