Hospital groups creating company to make cheap generic drugs

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TRENTON, N.J. — Several major not-for-profit hospital groups are trying their own solution to drug shortages and high medicine prices: creating a company to make cheaper generic drugs.

The plan, announced Thursday, follows years of shortages of generic injected medicines that are the workhorses of hospitals, along with some huge price increases for once-cheap generic drugs. Those problems drive up costs for hospitals, require significant staff time to find scarce drugs or devise alternatives, and sometimes mean patients get suboptimal medications.

The not-for-profit drug company initially will be backed by four hospital groups — Intermountain Health, Ascension and two Catholic health systems, Trinity Health and SSM Health — plus the VA health system.

Together, the five groups include more than 450 hospitals, nearly one-tenth of U.S. hospitals. They also run numerous clinics, nursing homes, doctors’ offices and other medical facilities, along with hospice and home care programs and an insurance plan. More health systems are expected to join soon.

The goal is to counter the consolidation of generic drugmakers that’s caused shortages for more than a decade and allowed some companies to raise prices many times over what some generics once cost. Those include antibiotics, morphine, heart drugs and others.

“It’s an ambitious plan,” Intermountain Healthcare CEO Dr. Marc Harrison said in a statement. He said health care systems “are in the best position to fix the problems in the generic drug market. We witness, on a daily basis, how shortages of essential generic medication or egregious cost increases for those same drugs affect our patients.”

Generic drugs can be manufactured very inexpensively, offering the hospital groups the chance to save hundreds of millions of dollars annually. The new company will either contract manufacturing to an existing company or get Food and Drug Administration approval to make medicines itself.

Source: washingtonpost