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Hospitals Creating Company to Make Cheap Generic Drugs

Their goal is to prevent shortages and give patients the best choices

medicine blister in pastel background,blue and yellow

Carol Yepes/Getty Images

The goal is to counter the consolidation of generic drugmakers that's caused shortages for more than a decade.

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

The plan, recently announced, 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 staff time to find scarce drugs or devise alternatives, and sometimes mean patients don't get the best choice.

The not-for-profit drug company initially will be backed by four hospital groups — Intermountain Health, Ascension, 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.

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, including the cost of antibiotics, morphine and heart drugs.

"It's an ambitious plan," Intermountain Healthcare CEO 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."

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