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Hospital Bars Drug Salesmen in Protest of High Prices

October 10, 1991

GRAND RAPIDS, Mich. (AP) _ A small hospital is taking a stand against the high price of medicine by barring representatives from six pharmaceutical companies from its grounds and capping what it will pay for drugs.

Saint Mary’s Health Services in Grand Rapids has targeted drug manufacturers whose price increases outstrip the 9.8 percent inflation rate in the Medical Consumer Price Index.

″We cannot stand by and allow this expense area to keep escalating unchecked,″ William A. Himmelsbach Jr., hospital president and chief executive officer, said in a statement.

″Our budget for pharmaceuticals and surgical supplies was off by over $1 million last fiscal year alone due to unannounced, unanticipated and unexplained price increases in the drug and supply category,″ Himmelsbach said.

Three weeks ago, the 300-bed hospital mailed letters explaining the action to six pharmaceutical companies: Alcon Laboratories Inc. of Fort Worth, Texas; Burroughs-Wellcome Co., Durham, N.C.; Eli Lilly & Co. of Indianapolis; Hoffman LaRoche Inc., Nutley, N.J.; Organon Inc., West Orange, N.J.; and Wyeth-Ayerst Laboratories Inc. of Mason, Mich.

″So far we’ve had two responses,″ Himmelsbach said Wednesday. ″One of them said, ‘Jeez, we got a glitch in our computer system. We charged you too much.’ The company then rolled back its prices.″

Officials from Burroughs-Wellcome met with Himmelsbach on Monday, but the meeting produced no immediate action. Himmelsbach said the drug manufacturer was mulling over the situation before making a decision.

The hospital has a 30-40 day supply of drugs and has not been denied any shipments because of its stand, Jack Newberry, Saint Mary’s pharmacy manager, said Thursday. It does not order medicines directly from the representatives it is barring, but obtains drugs through wholesalers or catalogs.

″We’re not saying we are not going to buy the drugs. But like I told Burroughs-Wellcome, ’If you want to shut us off, that’s your decision not ours,‴ Himmelsbach said.

″We are looking into it,″ said Hoffman LaRoche spokeswoman Nancy Mattison. ″But we’ve only received the letter this week. We haven’t contacted the hospital yet.″

Hoffman LaRoche, which makes the AIDS drug roferon and several other medicines, spends roughly $1 billion a year on research and development, Mattison said.

″The only way to fund that is through the products we have on the market now,″ she said.

The other pharmaceutical companies did not immediately return telephone calls Wednesday.

Saint Mary’s, one of 23 hospitals in Michigan, Indiana and Iowa in the Sisters of Mercy Health Corp., apparently is alone in its crusade to lower drug prices, the corporation and trade and professional groups said.

″This is the first we have heard of any type of protest, but it is indicative of the frustration people are having over the increases,″ said Rebecca Wilfinger, spokeswoman for the American Society of Hospital Pharmacists. ″But prices have just gone through the roof - far more than inflation.″

A recent report from the U.S. Senate Committee on Aging said drug prices have increased at nearly three times the rate of inflation over the last decade.

″We recognize the manufacturers’ need to generate a reasonable profit,″ Himmelsbach said. ″But I must question a manufacturer’s commitment to social accountability with inflationary price increases of this nature.″

Five years ago, the hospital’s drug and surgical supplies accounted for 1 percent of the total operating budget. That figure has ballooned to 5 percent, with Saint Mary’s spending $7 million on pharmaceuticals alone last year, the hospital said.

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